In this tax saving season, sale of term or pure life insurance plans has gone up by 30-40 per cent, say insurers. Most companies, eying the opportunity, have launched online term plans. Online plans are 20-30 per cent cheaper than regular term plans.
Experts suggest that term plan should be bought those who have financial liability, as it has high life cover for low premium. Term plans do not have any investment components and maturity benefits. If the policyholder outlives the tenure of policy, he doesn’t get any return on premium.
“Term plans sales are going up due to increase in awareness. Number of term plans and total sum assured has gone up significantly. But, total premium earned from term plans is not very significant as premium for term plans is low,” Gorakh Nath Agarwal, chief actuary at Future Generali India Life Insurance.
Term plans sold online are cheaper as insurers pass on the cost saved on distribution (agent’s commission) and are loaded with more features. Most life insurance companies have begun offering term plans specially designed to be sold online. HDFC Life Insurance recently launched online term plans. To push online sales, insurance companies are adding more benefits to make their online term plans more attractive. Aegon Religare Life Insurance revised its existing term plan with new features.
“Online plans are cheaper than the ones sold through regular channels because there is no intermediary between the buyer and seller, thus, saving on commission. Online term plans are competitively priced. Customers willing to buy term plans can easily buy it online within few minutes. Number of term plan customer is increasing steadily,” said Yateesh Srivastava, chief marketing officer, Aegon Religare Life Insurance Company.Aegon Religare introduced first online term plan in the market.
One can enhance life cover by adding riders (or attachments) to the life cover by paying a small additional sum. Popular riders include critical illness and personal accident. Basic features of term plans, both sold online and offline are similar and suicide is excluded.
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Tags: insurance policy, Term Insurance, term plan