Online term insurance v/s offline insurance

POSTED BY Jagoinvestor ON June 9, 2011 2:41 pm COMMENTS (26)

What is the difference between a Term Insurance purchased online and A Term Insurance taken from an agent? Are both type of policies offer identical features?

26 replies on this article “Online term insurance v/s offline insurance”

  1. suresh says:

    are there any differences between online policies and offline policies regarding to claims?

  2. suresh says:

    can one get online term policy who iives in towns and villages?

    1. Not for all companies ! ..

  3. pavan.malekar says:

    Hi Manish,

    Thanks to you and the participants for the informative spread through the article..

    As mentioned, 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.

    Also in one of your other article, I came to know, 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.

    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

  4. Dear Shiv, the insurance business is done on the basis of honest declaration from both side i.e. Insured person & from insurance co. Regarding the online term covers, if one is putting in false info about his health or addiction or job profile or family health history, Indurance co. is not at all at risk. It ‘ll investigate the matter seriously in case of claim & if any info suppressed by insured person knowingly comes to the notice of the insurance co. well my dear friend, the claim ‘ll be rejected happily.

    As far as question of identification goes, at the time of online term cover purchase, your ID proof, address proof, income data etc ‘ll be demanded by insurance co. in question.

    thanks

    Ashal

  5. Shivakumar A says:

    How a Term insurance can be given without seeing the face of the proposer, his health conditions, Financial status etc.,

    1. Ashish says:

      Dear Mr. Shivakumar,

      Why are you so persistent on seeing the face of the insured?

      LIC never ask for a photograph of the insured at the time of issuing policy and is only interested in the right medical information provided by the client either through medical test or on his own.

      Also the agent who helps in getting the policy most possibly will not remember the face of this person, when it comes to claim settlement.

      Ashish

  6. ashokg says:

    There is hardly any difference. Online insurance is cheaper though. This article explains why online insurance is cheaper.

    https://www.jagoinvestor.com/2011/12/cheap-online-term-insurance-plans.html

    I recommend AVIVA online insurance to everyone.

    I bought an insurance policy online from Aviva recently and I can say that it is definitely one of the safest and best insurance policies online. The terms and conditions are very clear.
    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. The website is really user friendly.

  7. aditya.kumar2244 says:

    Well this seems to be an interesting discussion featuring our age old agent defending his position versus a more pertinent question asked by the user.

    I will refrain from commenting on the agent view point which to state mildly is mainly baseless.
    To answer the question, there is no difference between buying an online term plan and an offline term plan on a very basic level, they both cover the risk of death.

    However, most offline term plans have 2 differences:
    1) They tend to offer some real nice top up covers (riders as they are typically called, covering additional benefit against accidental death for a small increase in premium… and also a very nice feature called Critical Illness cover which if taken supplemented by a decent health insurance policy should cover most medical expenses of reasonable scale)

    2) Offline plans are more expensive as they have the commission to be paid to agents built into the cost. Online plans are typically direct to consumer plans where agents are not incentivised to sell.

    to get a gist of comparing these policies, you can do comparison searches on many online sites these days,but the best I came across is this new site called Zibika.com, where one can search without getting into the hassle of providing any personal details like mobile number and all.

    Finally, I should add that buying a term plan from any insurer is about as safe as buying from LIC as people tend to state. What you should however do, is be extremely honest in disclosing all your health related issues up front, while this might lead to the policy cost going up, the chances of being rejected will be nullified. There is no reason for any insurer in India to not settle a claim if the disclosures are clear enough.

    Claims ratio is an interesting parameter but do keep in mind that online plans and even term plans are very new on the horizon, so the ratios will not give the most accurate picture if you compare with overall ratios of companies and do so of LIC having a significant head start on the newer players.

  8. sainath says:

    Online insurance sales have a clause if the claims ratio are high then they can increase the premium, not the case with LIC. And those who say about LIC having low solvency ratio, do you even know how IRDA computes solvency ratio??

  9. Dear Ashal,
    This is what i think..becoz in online policy one has to disclose every detail and also attach any document stipulated necessary..which normally is taken litely by online buyers..
    buyying policy offline provides you a guidance in form of agent who is well aware of insurance companies and thier modus operandi..i might be wrong…

    and this ratios are of online policies..which you can easily note down once you google the same…

  10. ashal jauhari says:

    Dear Kush, Can you provide more info – Form where did you get to know that online policies’s Claim settlement ratio is poor than offline one?

    Thanks

    Ashal

  11. Normally it has been observed claim ratio in online policies is comparitively low..
    If you prefer going online mode..no issues…but make sure you reveal each and every thing accurately easing off your claim if arises…
    highest claim ratio online : ICICI iprotect – 90% approx
    lowest claim ratio online : Aegon religare – 48% approx

  12. ashal jauhari says:

    Dear Shivakumar A, The data of 95% claim settlement ratio of LIC as mentioned by you is a 1/2 truth. Please do a simple mathematic calculation.

    Divide the total sum assured filed for claim by the no. of policies filed for claim. check it for the best claim settlement LIC & one of the worst Aegon Religare & post your finding here in this forum.

    Thanks

    Ashal

    1. Shivakumar A says:

      I am not comparing online and offline. My only concern is claim settlement.

      Term Insurance is Pure Insurance. Premium is very less.

      We need see the financial position of the company.

      LIC is 50+ years old company and supported by Government. LIC gives policy above 15 lakhs after proper medical tests only. How a company taking lesser premium than LIC can give claims.

      Lic gives claim in case of death due to Terrorism attacks without any extra premium (riders).

      No other company covers. So, Please consider LIC because you life is precious.

  13. Ramesh says:

    All big ticket term insurance policies have medical tests.
    An online term insurance makes a lot of sense, if you are going to do some work like filling the forms by yourself and other similar “little things”.

    An offline insurance policy has these benefits. Apart from that, if the insurance agent takes a job in a different company or changes his job to a different location, you are then on your own anyways.

    @ Shivakumar,

    you mean to say deafness and dumbness or other physical handicaps are hazardous for life? If that handicap is declared at the time of policy issuance, there are no issues. The medical tests and declaration by the proposer at the time of policy initiation are for this thing only.

    By your logic, there should be no rejections by LIC since the LIC makes sure that the policy holder has undergone medical tests, and all LIC agents and doctors are absolutely nice and correct.
    Then why is there only 95% claim ratio and NOT 100% by LIC.? Care to give an answer to that. 😉

    Ramesh

    1. Shivakumar A says:

      Handicapped proposer has got some limitation. In some cases Double Accident Benefit cannot be given.

      A normal person can take policy upto 4 lakhs only. Above that he has to go for medical.

      An employee of a company with average turnover of 50 crores is premitted upto 15 lakhs without Medical.

      LIC will not give policy to a heart attack patient because one should not make profit from Life Insurance.

      LIC claim ratio is around 95% and not 100% because there may be some pending cases without proper documents. Many people make wrong claims also which causes rejection.

  14. Shivakumar A says:

    Dear Friends,

    Pls don’t get confused.

    Term Insurance is pure insurance and premium will be very less.

    But LIC gives Term Insurance after required medical test only. This is the reason LIC is No.1 in giving claim settlements.LIC’s claim settlement ratio of 95%, which is highest among all insurance companies.

    Online Insurance Policies are a biggest mistake.

    How a company can give Term Insurance without seeing the person?

    The proposer can be dumb, deaf, eye problem, physically handicapped etc.,
    How a company will given claim if they started giving policies online without seeing the proposer.

    This is the reason of rejection of claim settlements.

    1. Shivakumar A says:

      Claim Settlement Ratio and Profit and loss of all insurance companies

      can be taken from

      http://www.irda.gov.in/ADMINCMS/cms/frmGeneral_NoYearList.aspx?DF=AR&mid=11.1

      by downloading reports.

      You are best to judge

    2. ashal jauhari says:

      Dear Shivkumar, Are you associated with LIC in any way as I’m seeing a biased in your replies for LIC. The so called highest claim settlement ratio of LIC is 1/2 truth. Just divide the total sum assured filed for claim by the no. of policies (claim) & you ‘ll come to know the real truth. Regarding the medical tests, even online term plans ask to go for a high degree of tests.

      Now the last shocker for you – LIC has the least solvency ratio in all life insurer as per the same IRDA report you are quoting for claim settlement ratios.

      Thanks

      Ashal

      1. Shivakumar A says:

        I am agent with LIC.

        Kindly compare all facts.

        One may feel private companies are more advanced in terms of technology, but everything depends on claim settlement.

        1. ashal jauhari says:

          Dear Shivkumar, thanks for the clarification that you are an LIC agent but my dear friend, you forget to quote the average sum assured per policy in LIC as per the IRDA report & the fact that Solvency margin of LIC is the lowest. Please share your views on the same.

          Thanks

          Ashal

  15. ashal jauhari says:

    Dear Friend, the features are identical for online or offline mode for a similar policy. Like ICICI Pru’s I-Protect it’s available under both option- online & offline.

    Features are same in both options the difference lies in the prem. amount as online is cheaper than offline for the reason as pointed out by dear Manish above.

    Thanks

    Ashal

  16. Mainly the main difference is that an agent is not involved in a on line term insurnace and company saved the commission + other operating costs involved if policy if offline . So the premiums are cheaper ,

    Another reason why term insurance online is cheaper is that most of the the companies which offer them have revised their mortality rates tables and which reflects the correct risk scenario of today’s life , unlike LIC which is still having the old one .

    Manish

    1. Shivakumar A says:

      Life Insurance can be taken from wherever you want. But, your nominees will feel the difference.

      The policy holder may feel easy (without proper medical tests) in taking policy online, but in case of of any problem, their nominees will be the real sufferers.

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