The reason why premiums of Online Term Insurance Plan are cheap !

POSTED BY manish ON December 5, 2011 COMMENTS (146)

So let’s just come to the point directly! Why the hell on this earth are these Online Term Insurance Plan premiums so cheap? Sometimes even 25-30% of what an offline term insurance plan costs.

So now, think hard! What are the factors which make Online Term Insurance Plan premiums so cheap?

Online Term Insurance Plan

You will hear most of the agents, planners and even media personalities tell you that its lower because the agent commissionis saved and other administrative costs are not present in online term plans, but that’s not the biggest reason because if agents commission is just 25% of the premiums in 1st year and there after it’s in single digits for rest of the term.

So if agents commission’s absence was the reason for lower premiums than it should be just 10-15% lower than offline term plans.

Current Online Term Insurance Plan in market

At present, there is total 10 Life Insurance companies who are providing online term insurance plans and their premiums differ from each other. The cheapest premium seems to be from Aviva iLife for most of the categories.

For example for a 30 yrs old male, a term insurance for 1 crore for a 30 yrs term would cost only Rs 8200.

  1. Aviva iLife term insurance
  2. ICICI iCare term insurance
  3. Kotak e-preffered Term Plan
  4. Aegon Religare iTerm
  5. Metlife metprotect
  6. Future Generali Smartlife
  7. HDFC Click 2 Protect
  8. IndiaFirst anytime
  9. DLF Pramerica – UProtect
  10. Edelweiss Tokia – Life Protection

The real reason why online term insurance planpremiums are so cheap is that because of the segment which buys online is perceived to be less risky! It’s about the target market category. A person who is net-savvy is perceived to be less risky than a person who is not net-savvy and then it’s assumed that he will have access to better health care a better lifestyle and more chances of outliving his non-net-savvy counterpart.

So a govt employee from Jaunpur buying a term plan directly is seen differently than an IT professional from Bangalore taking an online term plan.

So on an average a person from a big city like Mumbai, Bangalore, Pune, Hyderabad and other big cities having an ability and access to buy online has a different profile, than a person who belongs to a tier-4 and tier-5 city who is not net-savvy !

Both have different risk profiles, different mortality rates and hence premiums vary a lot.

Commissions and Admin costs ?

Not to forget the agents’ commissions and administrative costs which are saved when an online term plan is issued. Those also help in saving the cost to some extent. As each and every company has its own claim record, their own underwriting rules (rules to decide the premium) and depending on how aggressively they want business :), the online term plans premiums can vary a lot across insurers.

You should check this article from moneylife on Term plan and their premiums pricing. So I hope you must have got a clear understanding of why Online Term Insurance plans premium is so cheap compared to other Offline Term plans.

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146 replies on this article “The reason why premiums of Online Term Insurance Plan are cheap !”

  1. mark says:

    Hi Manish,

    Good article and great help.

    One quick question. If an applicant is non-smoker and non-alcoholic while taking and becomes alcoholic after 8-10 years taking policy, will this can be ground for rejection of claim.

    Regards,
    Mark

    1. No it cant be . Infact now IRDA has already said that a insurance policy which is 3 yrs old cant be rejected for any reason – https://www.jagoinvestor.com/2015/12/no-claim-rejection-in-life-insurance-policy-after-3-yrs.html

  2. Binit says:

    Dear Manish,

    May I ask; regarding the question of being a “smoker/alcoholic” during insurance application and if I used to smoke in college but no more, would I still be considered a “smoker” by an insurance company? I am a very infrequent and casual drinker, so would I be considered an “alcoholic” from an insurance companies perspective?

    Also vice versa, someone can be a non smoker/non alcoholic upon application and in future could become one, so would that be considered as breach of trust/hiding of facts by an insurance company, in turn getting the claim rejected?

    1. Yes, you should mention your self as Smoker and Alcoholic. See what exactly have they asked.

      1. Binit says:

        Thank you very much Manish. Appreciate.

        1. Glad to know that Binit ..

  3. ruturajpatkar@hotmail.com says:

    I understood from LIC officer that there is a clause of investigation if a policyholder dies within 3 years after buying the policy. Here the relative of policy holder have to prove their innocence. But after a period of 3 years claim settlement is relatively easy.
    But
    in case of online life insurance policies the clause of investigation is active throughout the entire period of policy. That is even if a policy holder dies after 25 years of buying the policy the entire health history and related things will be investigated before the claim settlement.
    All know that this investigation is to find any lame excuse to deny the claim.

    1. Hey Ruturaj

      I think somoene has misguided you. It does not work that way !
      Manish

  4. pavan.malekar says:

    Hi Manish,

    As mentioned, that one of the reason for the online policies to be cheaper is that — a person from a big city having an ability and access to buy online has a different profile , than a person who belongs to a tier-4 and tier-5 city who is not net-savvy ! Both have different risk profiles, different mortality rates and hence premiums vary a lot.

    Also in one of your other article, I came to know, that, one has to make sure to reveal each and every thing accurately while purchasing an Insurance policy, easing off the claim if arises. And, if in the details provided, something found to be in-accurate, then, there are chances of the claim getting rejected by the companies.

    Please, consider a case, where a person who is working as a Software Engineer, having good salary living in a big city after revealing each and every thing accurately, purchased a term insurance policy.
    After few years of regular payment of premiums, if the same person moved to his native which is a small town, to look after their family business.
    If a claim arises for such a policy, can you please explain the chances of the claim getting approved/rejected, if the policy was
    1. purchased Online
    2. purchased Offline
    Or
    1. taken from Life Insurance Corporation of India
    2. taken from a private company.
    Thanks..

    Regards,
    Pavan Malekar

    1. The claim will be paid in any case if at the buying the policy all the details where provided correctly. What happens later is not considered

  5. Pavan Malekar says:

    Hi Manish,
    I have gone through many of your articles and thanks for the informative articles.
    I should not forgot to thank the participants also who bring more information into these articles.
    Manish, I have a query, it would be helpful, if u can reply..

    I have checked, HDFC Life Click-2-Protect Plus..
    The online premium for a person aged 35 yrs (Non-Smoker, Non-Alcoholic) for a sum assured of 1 crore for a term of 39 years is Rs.16,865/- (Including Taxes).
    When I visited the branch of HDFC Life, I got the quotation for the same and the premium for it is Rs.17,857/- (Including Taxes).
    Isn’t the policy taken from the branch is considered to be offline..?
    The difference between them is Rs.992/- and in percentage it is around 6% higher than the online one.
    1. My query is whether there are two categories in offline again..?
    one policy taken through direct branch itself and the other policy taken though an Agent..?

    Thanks..

    Pavan Malekar

    1. Paven

      Its not OFFLINE or ONLINE difference, but with agent code and without agent code. The 6% difference is not much, but if you have an agent with you, they might offer you something unique .

      For example , even we are registered with HDFC and we give our clients HDFC click2protect, and we offer Claim settlement assistance to their families later in life if required. So if you are planning to take it without agent help, then go with online option (through website), but if you feel you need a detailed help in filling up form, claim assistance service for your family later in life, you can then buy with agent option , which would mean 5-6% extra premium which I feel is not a big difference.

      So if you need it, you can even tell us or fill up this form http://www.jagoinvestor.com/services/life-insurance#fill-form

      Manish

      1. Pavan Malekar says:

        Manish,
        Thanks for the prompt reply..

  6. Kalyani C says:

    I am currently looking for online term insurance for my husband (age 35, non-smoker).
    I was comparing HDFC`s Click 2 Protect Plus and ICICI Pru`s iCare II as these two are given me Accidental riders support. However, the premium for 1 Cr for 25 years looks quite different. For HDFC, it is 12+K and for ICICI Pru it is 22+K.
    Wondering what are the reason behind almost 10K difference between these 2 policies? Any idea.

    1. They have different ways of evaluating the risk ..

      1. Kalyani says:

        Hi Manish,

        Could you please explain in more details ?

        1. Their underwriting procedures are different . Underwriting means the way they decide their premiums ..

  7. Ashutosh says:

    Hi Manish,

    Thanks a lot for this wonderful blog and prompt discussion.
    I am 31 year old( Non-alcholic, non-smoker) and planning for my 1st Term Plan of 1cr, on which I have couple of questions, some of them are partly answered above here and there, and would appreciate if you help me take a decision

    1) If I go for 50L – 50L plan with two companies and incase of any mis-happening in future. How much is it possible that if one of companies reject the claim and the second company will follow the same and can reject the claim?

    2) How medical check-up is done in case of online term plans?

    3) Considering an investment to save future of dependents, I do not focus much on premium (if there is not much difference), Planning HDFC Click2 Protect for 50L and which is second one I can go for?
    Or Shall I go for single 1cr plan with HDFC?

    4) Is it beneficial to go ADB rider fo 10L paying premium of Rs.1000 extra every year.

    I know asked many questions, but would appreciate your response on this.

    1. 1. There is no relation between two companies. They both will take their own decisions . Same for payment of claim and rejection of claim

      2. Online term plan means the payment of premium will happen online and the form will be filled online , thats all . Once you pay the premium, you will get a mail for confirmation of premium payment and then medicals are arranged , they will give you a call and confirm for dates time etc ..

      3. Go for single plan for 1 cr . Splitting of policies was suggested long back when 50 lacs was enough and premium were high .. ‘

      4. Its about choice, critical illness gives you some extra benefit at additional cost, only you can decide if you need it or not .

      1. Ashutosh says:

        Thanks for the superb quick reply.
        Question on 3) Splitting of policies was also suggested considering that one of the policy can be closed. Does not it hold good in today’s world and upcoming times?

        – Also, been through your link to compare settlement ratio and solvency ratio (thanks for it) . Can you still help me make up my mind whose online option is better in terms of buying and further on followups after the premium is paid onnline – ICICI Pru or HDFC?

        1. Hi Ashutosh

          Just that in last 4-5 yrs , suddenly money has become so much important that 1 crore is something which for most of the people will always remain “required” .. I personally think that either you will close the whole policy or none ..

          So now you take your pick, you can still take 2 policies of 50 lacs and then close one later, but think hard , so you really see that happening ?\

          In between ICICI and HDFC , I cant say if one is better than other, but for most of the people i recommend HDFC ..

          Manish

        2. Dear Ashutosh,

          Here are a few points to help you make an informed decision:

          1. ICICI Prudential Life Insurance has one of the best claims settlement ratio in the industry at 96.29%*.

          2. Plus we are also one of the fastest in claim settlement and clear more than 90%* claims within a month.
          * As per IRDA’s Annual Report for FY12-13.

          To know more about our online term plan visit: http://bit.ly/17uqPjV

          Regards,
          http://www.iciciprulife.com

        3. Yes now a days if you are taking a 1 crore policy or less, I would suggest go for just 1 policy. also i would rate HDFC and ICICI pru equal .. go for any .

  8. kens says:

    Hi Manish,
    Recently I came across your website.Thanks a lot for the wonderful articles.
    I’m 38 years male. Planning to take 60 lakhs to 1cr term online plan. please suggest me a online term plan and should I divide that between any 2 insurance companies. and should i need to choose any riders. Waiting for your reply. Thanks in advance

  9. Roopesh says:

    Hi Manish

    What do you think of Tata AIA iRaksha Supereme plan. It is a pure term insurance plan with 40 years term and offers cover of Rs 1 Crore for approx Rs 9500 ( 30 year old, male) compared to other options in market
    I like the 40 year coverage which apart from no-one else offers currently

    Regards
    Roopesh

    1. Go ahead in that case !

  10. aamod says:

    hello manish
    thank you for a wonderful and informative forum
    have one doubt
    how is hdfc from claim settlement point of view and term plan point of view
    would you suggest going for hdfc for term plan
    there are two term plans by hdfc; click to protect and hdfc life assurance but the premium of the second one is almost double than first for the same sum assured, why is that so

    thanx in advance

  11. Ashish L says:

    Hello Manish,

    I am not sure, if you will be responsing to this message as this article is quite old.
    I am 30 years old and plan to purchase a term plan for 1cr. SA. Do you advise Aviva? Or should i look for some other, kindly advice.

    Thank You.

    Regards,
    Ashish

    1. Aviva is good option , I would say go for it !

      1. Ashish L says:

        Thank You, i will register online right away 🙂

  12. Anand S Negi says:

    Dear Manish

    Thanks for the article.It was quite informative.

    I am planning to purchase a online term plan & had some queries regarding same.

    1- What if my policy provider closes business or goes bankrupt after few of purchasing policy? Will it be transferred?

    2-Will premiums be very High if I change my policy later years & opt for some other company’s policy?

    Thanks

    Anand

    1. 1. IRDA takes care of that

      2. Yes

      1. Anand S Negi says:

        Thanks!

  13. Pranav C Lunavat says:

    Dear Manish,

    I have brought a term plan(50L) from HDFC from market two years back. The Premium which I am paying is Rs 11500/-

    Now I can see that the online policy of same HDFC is with 50L cover is having premium of Rs 6000/-

    what should i do?
    1. Buy a new online policy and cancel the old one
    2. Or Continue with the existing policy (only if there are some benefits)
    3. can i convert the old policy to online policy and reduce the premium

    Regards,
    Pranav C Lunavat

  14. Pranav C Lunavat says:

    Hello Manish,

    i have taken a HDFC Life term plan for 50L 2 year back with premium of 11500/- form market
    now i can see online term policy of HDFC for same amount to be 8500/-

    so is it advisable that i discontinue the old policy and take new policy?
    or can i transfer the old policy to the new one?

    thanks & regards,
    Pranav

  15. Kiran says:

    Hi,
    Your article is nice and helpful…
    I m 27 year old, want to buy online insurance policy, want cover upto Rs 1 to 2 lacs, which is the best term plan with good benefits and low cost? can u please suggest me some plans…

    1. Kiran

      Are you sure you want to take a term plan for 1 lac cover ? Is that sufficient . I hope you are clear what is meaning of term plan ?

  16. Sagar Deshpande says:

    Hi Manish,

    Great article once again. It was very informative. I believe an online term plan is a great way to have yourself insured as it gives you the complete control of your policy apart from being cheaper than a offline term plan. I, however had a very bad experience with Aviva iLife. I have a medical condition and had mentioned it in the medical tests which I had been asked to undergo. The way the whole process was handled, left a lot to be desired in terms of service and customer management. Eventually, my policy was declined but it took them around 70 days to take that call after the proposal was filled. I would like to know your views about whether a person who has some medical issues or a higher probability of a revision in premium should go for an online plan because most of the times you deal with customer service representatives who rarely have any detailed knowledge or expertise to handle issues which may arise during such a proposal?

    Sagar

    1. Yes you should go with online policies only , there are many cases where things were smoother, your case is rare !

  17. Ashok says:

    I bought an insurance policy online from Aviva i-life a few months back. I’m not net savvy and I found the process very easy. There is an online chat support which assists you if you have any question and you can get the entire process done in less than an hour. Aviva’s website is really user friendly. Can’t say about others though.

  18. feroz says:

    HI MANISH,

    i am feroz from chennai

    i try to online term plan cheap best aegon,axa,hdfc

    but consumer complaint very cteap company bhrat axa,hdfc online trem plan’
    display

    iam not best online term plan with out medical test 50 lakhs

    i have 3 yrs back 75 lakhs all life insurance term plan i do no

    i try to online term plan
    more question after death 100% clams ?????
    which best plan ?????

    1. You can go for Bharti Axa

  19. Roopa says:

    Hi Manish,

    I have couple of queries.

    Why are women less insured compared to men?

    Whether housewife can be Term insured with no annual income ? Because, Bharti AXA Term insurance Sum Assured is relative to individual annual income.

    With Govt. of India allowing 49% FDI in insurance, can we expect premiums to go down still and hence wait for foreign players to come before taking a term plan?

    But in the meantime, which do you think is the cheapest online term insurance in 2012 ?

    Will the IRDA come to help if insurance company defaults on the maturity amount for a Term plan taken online ?

    Tx
    Roopa

    1. Roopa

      Wife can take term insurance if she wants to , but the logic is that she needs to have some one as financial dependent. The cheapest right now are Bharti Axa, HDFC and Aviva

      1. Roopa says:

        I enquired Bharti Axa, HDFC, and Aviva, and the following I found :
        * Only working people can obtain term insurance.
        * Only people residing in few specific cities can obtain term insurance.
        * Bharti Axa — Sum assured is proportionate to his/her annual income.
        * Aviva — Either 3 months salary slip or latest income tax returns/Form 16 is a must. Neither of the 2, then no term insurance.
        * Aviva — Housewife cannot get term insurance because she is not working !

        1. I dont think its the case with Aviva . I recently took a plan from them and it was not asked by me

          1. Roopa says:

            From: “onlinepolicy@avivaindia.com”
            Date: Fri, 7 Sep 2012 16:43:07 +0530
            Subject: RE:’AvivaIndia=004-455-349′ term insurance

            Dear Mrs. Kulkarni,

            Thank you for choosing Aviva for your Insurance needs.

            We wish to inform you that as per product feature, i-life term insurance is not available for house wife.

            We look forward to resolving your query at the earliest.Thank you for being a valued customer.

            Warm Regards,
            Lalit Singh Bisht
            Team Aviva

            1. I was talking about hte salary slip part. For housewives, it might not be there.

              But housewife does not have any financial dependent on her . Why would she need a term plan ?

      2. Renu Batra says:

        Manish i found out that women can not have term insurance unless they are earning money as the company ask for salary proof to pay the premium. Moreover they have another logic what if anyone who is supporting them financially is not there anymore. Hope i make sense here as i was looking for one for myself and got turned down by private company but not from LIC, only God knows why? I guess agent wanted his commission, am i right?

        1. The simple reason is that no body is financially dependend on you . because you are not earning money , A life insurance is generally bought by someone who is bring home money and others are dependent on that . I hope you got this view point . Dont you think it makes sense ?

          1. Renu Batra says:

            In that case, women who earn money but no one in the family is dependent on her and their husband earn better living, can not have term insurance?? Please educate me on this point of view.

            Thanks in advance!

            1. The person is eligible to take, because it might happen that a perosn might loose the job in future, so it will be on the person if he wants it or not .

  20. deepak says:

    Dear Manish,

    i had an aviva online plan since last year for 50L premium being 5281 .
    now i wish to take another 50L cover.Avia charges are now 5582 ( increase in service tax.)
    so eventually i end up paying approx. 10800 for 1cr total coverage via 2 policies from aviva of 50l each.
    if i take a 1cr fresh policy it would be approx.10200.
    my question is that will it be advisable to take one policy of 1cr and discontinue my year old 50l policy or continue year old policy and add one more 50l policy
    OR continue 50l year old policy from aviva and add another 50L policy from bharti axa @ 5382 ( to split 1cr across two companies)???????????????
    kindly pls advice

    1. Better take a new policy of 50 lacs, that way you have 2 policies , which you can stop anytime !

      1. deepak says:

        sir,
        thanks for ur prompt reply but dilema is paying 900 more for same is it adviceable across 25 yrs for that comfort when ultimalely i can get same 1cr coverage and save 900 extra premium.
        Associated query is how good is bharti axa…

        1. In that case go for the cheapest one , bharti Axa only

  21. Abhijit says:

    Great!
    I am new to the stream so thought one more thing to ask, whether the claimed amount will be taxable? Example- If assured amount say 1cr when claimed by the damily members will be after deducting the tax from it?

    1. No it will not be taxable !

  22. Saurabh Rathore says:

    Thanks Manish for the good work and some very valid points raised for and against online policies by everyone.
    My view is that since term plans are for a period of 30-35 years, i would not expect my family to rely solely on an Agent. How can i be sure that the Agent is contactable after 30 years or maybe i would have moved to some other city and it may be practically impossible to get any help.
    I am also trying to decide which term plan to take but inclined towards online policies as the cost advantage is too much to ignore.

    1. Yes.. very valid point .. and anyways agents will not be there to support you always .. its very rare that those kind of agents are there !

  23. Ruchi khandelwal says:

    Hi Manish,
    I want to buy Kotak preferred term plan for Rs. 50 lacks. Is this choosen plan is correct ? also I am confusing in buying offline or online mode…Please suggest

    1. Its a good plan .. go for it

  24. Avanish says:

    Online insurance is based on self declaration..and policies provided on base of this.. so, at the time of death claim.. rejection possibilities are increased , even a small acceptance..or a wrong declaration might becomes the reason of rejection of death claim.

    1. Yes . thats why one has to be very cautious in applying for it !

  25. Dhawal Sharma says:

    @Manish,

    BHARTI AXA too has come up with its ONLINE TERM PLAN which is cheaper than AVIVA I-LIFE..

    What to do?? Lets all shift our focuse to BHARTI AXA and start buying this TERM PLAN as now its the cheapest option…

    1. Dhawal

      Good humour ! 🙂

  26. KRANTIVIR RAJPUT says:

    Aegon Religare iTerm plan has launched a revised plan….excellent product.
    visit: buyonline.aegonreligare.com

  27. Brett Anderson says:

    I bought a Kotak Preferred Term Plan, they asked me to visit a diagnostic lab, did blood, urine, nicotine tests + general check with a doctor, ECG, BP, etc. Look at it this way, the same tests would have cost you double or more, but Kotak does it at their cost and at a more reasonable price. Though e-preferred plan is also available and you pay lesser premium, I went for the offline plan, why? With online plans, you can tend to lie. The company also might not give you much importance as you are an online customer. I did not go to any agent, contacted Kotak on their website, they sent their man who works as a senior manager with Kotak. When any representative meets you in person, your body language is a dead giveaway that you might dodge some question or tend to prevent eye contact. Tomorrow, if you were careless as you filled the online form, the company might not settle claims. My advice is go for offline – whether you are in IT, tier 1 city or an agricultarist in rural area.

    1. Deepak R K hemani says:

      If you are going offline then you MUST go through an agent whom you KNOW or TRUST, some one who has been in the field long enough to be able to service you in times of need eg change of nominee, address and more importantly the real purpose of having a term plan at the time of death claim, the nominee will not know what to do whom to call, the company is not going to send ANYONE to your house to do the paperwork.

  28. Saket says:

    Hi Manish!
    HDFC Click 2 Protect offers me Rs 50L coverage at a premium a good Rs 2k less than that for a coverage of Rs 40L!!!!! Not very logical.

    Interestingly, the preiums againg rise from 50L to 60L.

    I am sceptical why Rs 50L coverage comes at a lower premium than Rs 40L coverage? Could there be a reason like more stringent medical fitness critera for Rs 50L coverage ? or a different eligibility criteria like- finacial status / living condition etc? I must know the exact reason before going for the more tempting offer of Rs 50L coverage (less premium and higher coverage than Rs 40L).

    Nobody from HDFC Standard has been able to explain this to me. All they say is exclusions and the terms of coverage are same in both cases. And the premium depends upon our internal calculations which is normally not shared.

    My simple argument is- How come the mortality rate (for the same perosn) considered for Rs 50L can be less than that considreded for Rs 40L coverage?

    I get a feeling that there is something that the company is unwilling to disclose!
    While the insurers expect us to be completely fair and honest in revealing the facts in our application, they too should be most transparent in answering our queries.

    I believe you can help me crack the puzzle. Thanks!

    1. Let me try to find out that ..

    2. Deepak R Khemani says:

      This is the trend nowadays take high cover and get Insurance at a lower cost but your logic of mortality table seems correct, Here I can point out one thing to you, how is the mortality table different for online term policies compared to offline. If you have no problem in that calculation then there should be no problem in taking higher cover at a lower cost! The argument given of commissions to agents does not hold because it is true only for the first year. Also if there is no trust before taking a policy then better try somewhere else!

      1. Saket says:

        Thanks Manish! Would eagerly wait for your comments.

        Thanks Deepak R Khemani, for your views.

        Completely agree with you in what you said about TRUST. And more is the clarity about the logic of premium rate, more the trust it will generate in people.

        However, I do not wish to reject any policy just because it is cheap and hence could be ‘too good to be true’, but wish to make an informed decision while going for it. Inputs from bloggers like you would help me and people alike, immensely.

        People who ask for term insurance are from the more aware lot and I think time has come that insurers start sharing with this inquisitive set of people, the details like reasoning behind pricing etc., (instead of just telling ‘ Sir, why do you bother ? You are getting a higher coverage at a lower premium. Just go for it.’ ).

        You mentioned an interesting point on the mortality table used for Online and Offline policies. May be they consider the online chaps to have a lesser mortality rate than the offline Junta. But what puzzle me is- for the same ONLINE guy, they consider a higher mortality rate when he seeks coverage of 40L and less when he seeks 50L?

        Is the mortality rate the reason here or could there be something else? Could the 50L premium rate be just a carrot to draw the attention and would invariably be increased later? Don’t really know!

        1. Saket

          Here is a reply from Mr. Sourav who is a senior manager at Aegon Religare .. I sent him a mail and got this reply

          Hi Manish,

          Thanks for writing. Let me explain how this works.

          At higher insurance rates, the medical tests are compulsory for most companies. Mostly this limit is over 49.99 lakhs.

          So as such when a customer goes for medicals, the company is sure that they are insuring a better quality of life with a higher life expectancy.

          As such the risk with insured population of customers undergoing medicals and being issued a policy, is much lower than with customers who opt for lower sum assured and are not required to

          Undergo medicals.

          It’s a risk-reward mechanism. The company offers an incentive to the customers to undergo medicals by offering lower charges for higher cover.

          Only people who do not have enough time to go for medicals opt for life cover of lower amounts where premiums are higher. But this doesn’t mean that customers who do not undergo medicals and pay higher premiums should worry at all. Once they have declared all details correctly to the insurance company and are issued a policy, they are as secured as those customers who have undergone medicals.

          Also the medical costs are borne by most companies. For instance AEGON Religare bears the cost of medicals for all customers.

          Hope this clarifies.

          1. Saket says:

            Thanks Manish. The 49.99 example makes me understand now. Wonder why all these helpline guys couldn’t have explained me the thing earlier. And your comments about Medical / Non-medical policies answered my further queries in advance.

            As a common man seeking to buy Term Insurance I have been talking to people like my colleagues, agents etc. etc. and have always felt that the things are pretty murkier in this field. On-line or Off-line? Medical or Non-medical? What is the risk in non-medical? LIC or Pvt?, Are the agents Devils taking-way a chunk of our premium money or are they the angels who will help our family if the need arises, to get the claim?

            For each person who tells that agents are unnecessary, there is one who says that the agent only will help the family (for a commission from the family) to get the claim. For each person who advocates trustworthiness of offlline policy, there are two prasing the low premiums of online. Difficult to decide who is right. For each dubious agent trying to sell the policy somehow -even encouraging the applicant to conceal vital truths about helath and history, there could be four proposers who tend to lie under oath while filling the form. Phew!

            However, as I am going through various articles and threads in Jagoinvestor, things are becoming more and more clear. Appreciate your effort in providing good and unbiased info through this blog. I recommended this blog to a No. of my colleagues and friends.

        2. Deepak R Khemani says:

          I like the fact that you have done your research and are a financially aware person wanting to know everything especially something that is not logically right (in your case higher cover with lower premium). I think the reply posted by manish from Mr sourav from Aegon Religare seems very logical, your carrot argument also makes sense. Eventually it is for you to decide whats good for you. All I can say that if have really decided to go in for online term cover for yourself, do not delay, have as much cover as possible as soon as possible, if you keep on waiting for answers to your questions you may get some answers some may make sense some may not, all the best.

  29. krishna says:

    hi

    I personally feel that while taking term insurance from any insurance provider, the prority should be like this

    1. How much long term can i take the policy
    2. Up to which age i am getting life cover from the insurance companies, because risk will be high only after the age of 60’s find out the provider who is giving life cover for more than 65 years. previously some insurance companies used to give up to 70, i dont know what is present situation
    3. cost of insurance policy
    4. additional riders with the policy like ADB
    5. personally i feel never opt for critical illness rider in a term policy

  30. Shirish says:

    Aegon Religare launched new online term plan. Premiums sooooo cheap! Also With riders. Terms extended.

    1. Shirish

      yea .. thanks for that news .. i was aware of it .. with time , obviously the premiums would be coming down

      Manish

  31. nick says:

    hi Manish

    I am regular reader of ur post . pls keep the good work rolling .
    I hv one question in mind relating to the multiple policies . in case of unfortunate mishapping since all companies need original doxs how one can claim from more than one inc company . having a sepearte accidental policy ,one or two term plan how the claim procedure will work .does original doxs are returned after claim is paid ?

    1. Deepak R Khemani says:

      All companies do not insist for original documents. You at the time of filling the form have to mention about your other policies in detail so that in case of a claim original documents can be submitted to one company and that company will issue certified documents for the other companies to process. In a way it makes sense to have cover with preferably one or two companies at the most so as to avoid this hassle of documentation

    2. Puneet says:

      This is what my understanding is:
      Original document does not necessarily mean it’s single copy document.
      You can obtain multiple copies of same document in original. (e.g birth certificates and death certificates are issued in multiple copies all are original.)

      1. Puneet says:

        you just need to ask for multiple copies from the authorities..

        1. nick says:

          thx Manish , punnet and deepak .

    3. Nick

      Incase of more than one companies .. originals are not required always .. If one company can certify that originals are with them , the other company will accept the xerox

      Manish

  32. Puneet says:

    Just want to point out that any policy from Aegon Raligare is not a online policy in true sense. Just go to website and click login page (as a Customer). This page is broken atleast since last 8-9 months (that’s when i have been following up).
    You will have to deal with them on phone; customer support will ask you to send mail, who in turn will ask you to send documents. 😀

    1. Puneet says:

      PS: and btw, login pgae for Agents has been working since ever.

    2. Puneet

      thanks for that info

      Manish

      1. Puneet says:

        And btw, currently you will not be able to pay premium online for Aegon Raligare
        the webpage is broken since ever. Try is yourself clicking the links on the website.
        http://www.aegonreligare.com/online-insurance-payment.php

        1. Puneet

          Which weblink is not working .. i clicked on few and they seem to open .

          Manish

          1. Puneet says:

            Hi Manish, I dont want to pinpoint details too much on this portal..would make me sound harsh..:) But you can try the following to start with:
            1. Try clicking Login (as a customer) on the main page. )
            2. Try clicking Main page > premium payment> online payment. )

            1. Puneet says:

              Update: I’m using IE9. As per their phone – support, they support only Internet explorer 7 or lower.

            2. OMG

              Thats horriffic 🙂

            3. I tried with FF and both are openeing for me

              With https://customer.aegonreligare.com:2443/Customer/ its asking for customer details .. obviosuly i put some random thing and it says “wrong credentials”
              The other link was also openinng for me and it asks 2 things Policy number and DOB

              Manish

  33. Nishant says:

    Hi,

    How many Term Insurance can one buy? ICICI is suggesting 1 Cr cover and Ageon is suggesting 1.1 Cr. Is it that my nominee would get calims from both the companies?

    Nishant

    1. Nishant says:

      Furthermore, would both the premiums be tax free under 80 C?

    2. Nishant

      You can take term plans from any number of companies , all will pay you the claim amount . Note that 1 crore or 1.1 crore .. does not matter a lot .. take action fast .. dont get lost in search of perfect “amount” … 1 crore or 1.1 crore .. do you really think it will matter A LOT ?

      Manish

      1. krishna says:

        Hi

        I agree with manish, you can take as many term policies as you can because noone in the world can value your life. but one condition is that you have to produce the proof of your first term policy while taking the second one. If u dont produce the same there is a chance of insurance companies come together and pay only one sum assured. Principle of controbution comes in to picture

  34. Vidya says:

    Hi Manish,

    I applied for a HDFC youngstar super II policy on November 5th online. In fact, I had approached policybazar.com for advice for insurance needs and learning my objective and the returns and insurance advantage that I am looking for, they suggested me to apply for this policy online. But my experience once I paid the premium and applied online is certainly not good and has caused headache to me. I was told that a representative from HDFC will contact me to get the proposal form and other documentation formalities completed and then policy will be issued. So far, inspite of repetitive followups with policybazar and HDFC customer service and escalations, there is hardly any progress. Today, I called up office of HDFC myself and I found an executive who was more helpful than others. But, she told me this is the problem with online application where you donot have a proper contact to help you out and they are not responsive. However, having learnt this now, I am interested to know if we have help from Insurance regulatory bodies where we can complain and ensure these insurance companies show accountability after having taken money from customers. If yes, what is the procedure and how fast and responsive are they? Thanks for your guidance.

    Vidya

    1. Vidya

      Its tough to get much help from regulators .. Better complain to banking ombudsman

      Manish

    2. Shirish says:

      I recently got health insurance policy of Apollo Munich. By Online procedure.
      I contacted the company representative and filled the form online while he was directing & explaining me each and every point on mobile.
      I made payment through net banking. Then he sent me proposal form by email. I took print outs, filled my details, attached some ID proofs and sent by courier.
      They acknowledged receipt of my proposal form by email. Then after 40 days, I received policy hard copy through speed post.
      Everything was as per schedule and with proper understanding.

  35. Dhawal Sharma says:

    Good that you have raised the bogey of ONLINE TERM PLANs [issne mere jaise agents ke pet pe laat maarni shuru kar di hai 🙁 ]. On this thread, i want to share a few things..

    1. Just read an article from Mr DEEPAK SOOD, MD and CEO of FUTURE GENERALI that with arrival of ONLINE TERM PLAN, it has become a commodity and industry at large has noted a BIG fall in parsistancy in these plans, i.e. most of the people are not renewing it. Dear manish, take an example of Mr RAVI, who has taken an ONLINE TERM PLAN from AEGON RELIGARE (The first TERM-PLAN so launched) in 2008 for Rs 8,000. Next year, when he was about to renew the policy, he came to know that now same ONLINE TERM PLAN is also available from ICICI PRUDENTIAL ITERM for Rs 6,800. And so Mr RAVI discontinued his policy from AEGON RELIGARE and started with IPRU. and then next year again, on renewal he realized that he is still paying somewhat higher amount. Why not take AVIVA I-LIFE now which is going to cost me Rs 5000 only..So this commodification is basically spoiling the basic LONG-TERM contract of INSURANCE (primarily in terms of PERSISTENCY)..

    2. This one is from my personal experience. Lot many of the my PROSPECTs and CLIENTs, are looking for ONLINE TERM PLAN to add to their FINANCIAL PLANNING PORTFOLIO. But the ease which is believed to be their is also a deterrent. One of my client about 4 months back told me that “arre Dhawal ji, jab online sab kuch itni aaram se ho jayega online to aap ko kya takleef dena. Mein khud hi ye wala plan le lunga.” but even after 4 months, he has not taken up the plan. Why?? because according to him, its just a few clicks away and i will get this within few hours or a day. so will do it next SUNDAY or chutti waale din, and hence procastrination. Also, that the news of ONLINE LIC TERM PLAN is there, now they are waiting for LIC plan launch and again more delay. Without agent, there ought to be a problem for PUSH PRODUCTs like life insurance.

    3. Last thing, as we PRESUME that those buying ONLINE TERM PLAN are tech-savvy, well-educated, and aware customer. But is it so?? Still a lot many of the them wants to know a lot more details about the plan by reading half-cooked information from here and there and then try to buy online. In my personal life too, public would sit with me for hours discussing all aspects of insurance (TERM PLAN in particular) and then want to buy ONLINE. So an AGENT cannot be ruled out any which way. Its just that earlier you were asking an AGENT about all the intricacies and then buying from him and now you are asking an AGENT about all intricacies and then buying ONLINE. “kaan aise nahi pakda to ghuma ke pakad liya..”

    4. Lastly, me being an AGENT myself and dealing in these issues day-in and day-out, i have purchased an OFFLINE TERM PLAN for myself because even i am not sure how/whom would my wife will approach for CLAIMs in ONLINE mode?? is the general public so aware (more so their nominee, because it will be housewives or kids who will be required to file claims, and not the so called TECH-SAVVY, SMART people) to follow up the entire process of CLAIM on their own?? I have my STRONG reservations and doubts..

    Dhawal Sharma
    URJA WEALTH CREATORS

    1. Deepak R Khemani says:

      Ditto Dhawal! I could have repeated what you have said and I second every word in your post. MOST of these people will never even inform their dependents of the term plan they have and even if they do the nominee will have no clue as to what to do, whom to approach in case of claim settlement and god forbid if something like a time limit for intimation and submission of documents comes into play in the LIFE INSURANCE industry(Just as it is in health Insurance) then just imagine what will happen!

    2. Dhawal

      Good points you have rasied .. What you have said in all the 4 points apply to many tech savvy people .. but you cant rule out the point that many people can buy the policies online and also handle it .. going through an agent offline has its own advantage and going through online has its own , its always what one has to choose . Its a decision and has to be taken by each person seperately .

      Manish

      1. Chandrashekhar says:

        Dear Manish,

        Please suggest me which is the cheepest term plan for 40 lakhs

        whether it to be online or it to be offline

        1. SP Gupta says:

          Hi Mr. Sood.

          for policy from an agent, I have a different kind of thoughts. few of them follows.
          1. I have a transferable job so lets say in case need arises some 2000 km away from the city from where i bought the policy how the agent going to help my nominee.
          2. It is a one time deal and once the deal is done why agent would take interest in such a customer who is not beneficial.
          3. Agents wanted to spend their resources for new businesses and if they will keep on welcoming old custs queries when they will get time for new/prospective custs.
          4. What if an agent is not available due to so many reasons like death, line of business change, etc.
          5. hope agent is not your friend or so because in that case i can see many behavioural/psychological driven issues like envy, jealously etc.

          also there are many unforseen risk/issues which exists if you through an agent. i agree there are pros and cons for everything but these are some thoughts which are running into my mind always.

          Thanks.
          SP Gupta

  36. readtoawake.com says:

    Great article!!! I think after reading this article everyone would buy Term insurance online because it is cheaper than offline term insurance. But there are many people who need to talk with professional insurance adviser before making serious decisions like life insurance.

    Hey Friends, correct me if I am wrong that Term-Insurance has just one big disadvantage that it does not provide you permanent life insurance as it has an expiration date and you will not receive any money back.

    and

    when the policy expires if the person is in bad health, Can he qualify for another life insurance plan?

    1. Deepak R Khemani says:

      A term plan is not your only financial plan. When you have a term plan you also need to invest money systematically so that you have built a LARGE corpus for yourself so that by the time you reach the end of the term you do not need any more cover, your corpus will take care of your retirement. This is the mistake many people are making by just thinking that a term plan is the ONLY SOLUTION. Its not it has to be complemented by some other FORCED and COMPULSORY saving come what may so that your corpus is built.

    2. Readtoawake

      Insurance policies are meant to insure the future earnings incase of a breadwinner death . So a family is dependent on breadwinner only till he brings the money home , after that his death does not impact them FINANCIALLY . so have an expiry date is perfectly fine and logical

      Manish

  37. Deepak R Khemani says:

    There is one thing most people are missing over here in this discussion.
    What does a new entrant in the Insurance Industry do to attract people? Lower the premium isn’t it, otherwise why will someone buy their Policy. Aegon Religare started it and it was followed by ICICI, KOTAK and now AVIVA and METLIFE.
    When telecom was opened up initially there were only 2-3 players however it is only when the number of players increased that call prices starting falling drastically upto 1 Paisa per second. This was the cheapest anywhere in the world.
    Same is the case with these Insurance companies, customer acquisition is the key, They can give whatever reason they want for the drop in premium in online term plans like commissions or net savvy people etc. If an Insurance company has a mortality table which it follows then logically the premium should be same across all categories, Term, Traditional or ULIP’s isn’t it. The cost of commissions is built into ULIP plans and comes as premium allocation charge to the customer!
    The idea is to sell a cheap variant of the Policy and then try to cross sell high cost products later, The example given above of the Kotak Sales person dissuading the customer is an example of how these companies work.
    What has also got to be noted is whether these people who are buying term plans
    online are going to continue to pay premiums over the term selected by them or they will be looking for BARGAINS as more and more companies drop their online premiums!

    1. Deepak

      Thats a very good point you have raised . I remember this same thing reading somewhere that cheap term plans are a way to make a relation and then cross sell higher premium product

      Manish

  38. Puneet says:

    Could you share the source of this information?

    My current theory is: Even if the quotes of online term plans looks cheaper initially; they are not actually when you really apply for them. Companies would most definitely add in premium loading for any reasons and that would increase your premium eventually.
    Online term plan quotes are low just to lure customers. I have not seen a single person who received online term plan without any loading added. Do you know anyone?

    1. Puneet

      See the link at the end of the article . There are many people who have got a term plan at the same quote which they get at first. But I dont deny the fact that if there is even a slight reason for increasing the premium , its increased as loading

      Manish

      1. Puneet says:

        Thanks!

  39. Sohil says:

    Well it might not be related but for car insurance bajaj provides online policy.

    Well last year i paid for my tata nano somewhere the premium came as 3400.

    This year being a year old and 25% no claim bonus still the online premium amount as same.

    I just for reference checked with fake detail for new car and was shocked that policy i bought last year online for 3.4k now costs 6-7k online.

    I know 3rd party insurance rates have gone high but have the same happened for 1st party too?

    My car IDV was 1.5L but with some modification on site i made it 1.8L and paid some jack up amount.

    Its not related but when i asked on some site they saying nowadays even for online policy they charge extra and one should contact direct sales team .

    Is that true only that i want to ask.

    1. Sohil

      What you are saying is true for Car Insurnace, this article is about term plan

      Manish

  40. yogesh says:

    Manish,Which of the online plan is applicable for NRI..
    ICICI Icare is nor for NRI..

    1. You can check with Kotak and Aviva

      Manish

  41. Raja says:

    Looks like this topic has come around full circle, and in a very short span of time too. Still remember your old post where we had a hearty discussion on online Vs traditional ones.
    https://www.jagoinvestor.com/2011/06/online-term-insurance-india.html

    In addition to what i said earlier, now i believe that we can know the truth only after we see stand alone financial results of these insurance companies. Are they loss making company (thinking they are now establishing their business) who are getting funded from their parent companies. If yes, probably they are not very sustainable and when business is not sustainable we can rest assure our investment isn’t either.

    1. Raja

      Yea agree with you

      Manish

  42. Dharmesh says:

    Manish,
    I already have online term insurance from Kotak for 50L and want to add another 50L from another company. which one out of the listed companies should i consider for online term plan?

    1. Dharmesh

      You have options like Aviva , ICICI or Metlife

      Manish

  43. bharat shah says:

    “A person who is net-savvy is perceived to be less risky than a person who is not net-savvy”
    i also find difficult to concur such fact, if it is. on the contrary, some say that working with computers for more time (which incidentally net savvy are, thought of , habitual) is not good for health. it is also that for online or off line, medical check up , which is mirror of health, would be same.

    1. Bharat

      I know that in some cases, this might be tough to digest . But look from mass point of view .. If you want to group people into “One group having good lifestyle , better access to good hospitals and food” and other one is opposite of group 1 , this way of categorisation will give you a good enough categorisation . At the end , this is they way insurnace companies categories them !

      Manish

      1. bharat shah says:

        manish
        thank you for your reply. i read moneylife article and got your point. however i brought two points in notice of the readers about online term plan mentioned in the article and i experienced while trying earlier for online term insurance:
        1.for screening or for unknown reasons , in start, you are asked about your income etc. and based on that you are getting’ regret’ response, but with same income you can get off line term insurance of the same company!
        2. as stated in the article, after health check up, they may increase your premium by 25% or so, you have to opt or you have to pay for health check up! we can presume, that their criteria for loading could be stringent compared to off line!
        3.some riders are available only with off line term insurance

        1. Avanish says:

          not only this.. we must look in to the financial results of the companies..which can be the future picture of the company..future existence of the company as well claim settlement ratio of the company.

  44. Sureka Verma says:

    Nothing like that Manish, I do not want to blame you in any ways, but it would be great if you could attach some links to authenticate your communication.
    So here I would request you to kindly share the related links where I can verify the authenticity of the information otherwise. I hope sharing this information will not affect your professional indemnity as those information are for public (not confidential) which you just shared.

    Regards
    Surekha.

    1. Surekha

      I have mentioned an article link at the end of the post . There are 1-2-3 parts of that post , go to 2nd one and see in middle somewhere .. this is written very clearly

      According to Dr P Nandagopal, CEO & MD, IndiaFirst Life Insurance, “Commission and expenses are not the main reasons for such a big difference in premium.” Here is the main reason, according to him: “The expected mortality of the targeted segment is one of the main reasons for low premium for online products. Insurers expect net-savvy, financially-secure individuals to lead a healthy lifestyle and also to have access to better hospitals so that the person lives a longer life even if it means lying in a sickbay. The preferred customers will be from software, the financial services field and other well-paying careers. The other aspect is that educated, savvy people understand the importance of proper declaration of medical conditions as well as giving correct information in the proposal form. There have been studies in mortality experience among different groups within the same organisation and it has been observed that mortality for employees with lower rank are sometimes as high as four times the mortality for the higher ranked employees. Customer segmentation makes a huge difference in the premiums offered by insurers.”

      Manish

      1. Shirish says:

        Manish is correct. I have read about the logic of cheaper Online plans in Wealth supplement of Economic Times.

  45. Sureka Verma says:

    Why the hell on this earth are these online term plan premiums so dirt cheap?
    “A person who is net-savvy is perceived to be less risky than a person who is not net-savvy”

    What the hell is this..??? Purely irrelevant.. Give some better justifying reason.. You can’t simply give any reason coming out of your mind..

    1. Sureka

      You think I have created those reasons ? Those are the points given by Insurance companies themselves . Not me . I am just communicating what insurance companies put the reasons .

      Manish

  46. Harsha says:

    Hi Manish,

    Out of context may be!
    I had called up a Kotak office recently to esquire about Online term plan, the sales person on the other end of the phone, gave me the cost details, but discouraged me extensively to not go for online term plans, his reasons:

    1. You will not be entertained in any of the offices to talk to them/complain to them/esquire or any kind of help, if you hold a online term plan.
    2. Calling their call-center is the only way that you could do business.
    3. Everything is only on net or through phone.
    4. And that there is no clear-cut guidance by GOI to these insurance companies on the service levels or anything else for online term plans.

    Based on my experience with call-center people of many different companies, I guess it would be scary to have to deal with them if it is something of the kind of term plan..?!

    In spite of it being expensive, I guess it would be better that there is a real physical person whom you could approach and question?

    Rgds,
    Harsha.

    1. Balaji says:

      Hi Manish

      Thanks for sharing those details. I currently don’t have one online term insurance policy. Which of the companies would you suggest me to take one.
      Also looking at Harsha’s comments above, I am little skeptical to take one online. Because I too belive that the business model would be different to address the claims for online.

      Please share your thoughts.

      1. Balaji

        As per my info , the claim process is same and not different .

        Manish

      2. Incase you are very skeptical , then dont go for term plan , it would require your trust if you want to move ahead .

        You should then go for LIC term plan

        Manish

    2. Shirish says:

      Yes. The same objections have been raised by the representative of the same company to me, Kotak. I was also thinking the same way that my family would have to go to Gurgaon or mumbai to setle claim, if they do not succeed in settling the claim online.
      But then I asked representatives of some other companies…ICICI, Aegon, myinsuranceclub.com, etc and they clarified that my family would be entertained by any nearest branch office, even if my plan was purchased online.

    3. Promod says:

      hmm… not exactly!
      That ‘person’ could be with one organisation now and later with another? He could no longer be an agent at-all with any company? He himself may not be living anymore? As long as you keep the records right, you should be dealing with the company directly (ofcourse thru their call centre’s) which I feel is more reliable.
      Any inputs?

  47. Chirag says:

    Nice one Manish.
    A hell lota actuarial science involved behind this 🙂

    1. Chirag

      Yea .. acturial science is the core of these activities .. not just online term plan , but overall health and life insurance

  48. Anish Pillai says:

    Never thought it from this angle. Thanks a lot for this info Manish.. 🙂

    1. Anish

      Yea .. this is the real reason for online premiums being cheaper . Do you hold a term plan online ?

      Manish

      1. Jawwad says:

        I wanted to have…

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