Wednesday, May 23, 2018

6 Benefits of Buying Term Insurance Online

People are increasingly getting aware of advantages & disadvantages of various life insurance products available in the market and carefully assess their personal needs before buying one. This is primarily happening in urban India because of variety of factors coming together such as easy access to internet, loads of educational content on blogs & forums and variety of products offered by many insurance companies.

One such theme which is widely getting popular these days is term insurance plan which, unlike conventional insurance schemes (endowment, money back etc. ), provides pure protection  and is solely taken with the intention of protecting the dependents in the family. There are many benefits of taking a good term insurance policy but the main benefit that comes with it is large coverage at affordable cost. Since term insurance is a pure protection product, companies are able to provide very competitive rates.

While the amount of suitable coverage varies from person to person based on their need, in general I recommend a sum assured of 10 to 12 times of one’s annual income. So if one is earning INR 5 lacs per year, the ideal term insurance he / she should take is INR 50 to 60 lacs. Off course the more the better but the premium also increases with the increase in sum assured and might not be suitable for the earning profile. You can use a term insurance calculator to check the premiums of various sum assured levels and decide what is best for you.  Here are the 6 benefits of buying a term insurance online:

1. High coverage at affordable premium: Term insurance plans provide a very high life insurance coverage vis-à-vis conventional insurance plans. For example for 30 year old person a typical endowment insurance policy with coverage of INR 50 lacs for 25 years would roughly cost INR 2 lacs in premium per annum while a typical term policy of same sum assured and tenure would cost less than INR 10000 per annum. Off course endowment policy provide some return on premiums invested but if the objective is pure protection and your investments are planned elsewhere, term insurance is the best option.

2. Easy access to insurance quotes - Today finding an online term life insurance policy is just a click away, due to digitalization. All insurance companies provide complete information about their policies on their website. In addition, policy comparison websites also helps you to compare different insurance products instantly.

3. Living benefits - In addition to death benefit, many term life insurance plans also provide different living benefits like cover against Critical Illnesses or Disability by paying a small amount of additional premium. This ensures that the protection of the Life Cover continues, even when you are unable to pay the premiums.

4. Competitive Pricing - It is easy to compare term life insurance policies with each other because they are structurally similar and also simple to understand. Also due to the absence of middlemen, insurance companies are able to provide very competitive rates for online purchase.

5. Tax Benefit - Under Section 80C, you can claim tax deduction on the premium paid towards your term plan up to Rs. 1.5 lakh & also enjoy tax benefits under Section 10(10D) on benefits received in case of an unfortunate event. Also for additional coverage with critical illness cover additional tax benefits can be availed on premiums paid up to Rs. 25,000 under Section 80D.

6. Fast Payout - Claims made on term plans are settled faster. As the structure of term life insurance policies is very simple, insurance companies don’t have much scope for debate and have to pay up as soon as a claim is made.

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