Despite its numerous advantages and tax benefits, the penetration of life insurance plans in India is significantly low. As of 2020, the penetration of life insurance was only 3.7% of the total GDP of the country. This is significantly low as compared to the world average of 6.31%. One of the prime reasons for these low insurance numbers in India is the numerous insurance-related misconceptions.
Even though these myths are conjecture, most people, including the educated ones, tend to believe them easily or at least use them to not buy a life insurance plan. However, this is not a wise strategy to adopt given the increasing life risk factors and the numerous benefits that a term life insurance policy can offer.
Read on to know about term plans and the misconceptions people have about buying online term policy:
What are term plans?
Term insurance plans are specific insurance policies that provide life cover for a definite period or tenure. In case of an unfortunate demise of the policyholder during the tenure of the plan, the insurance company pays out a defined lump sum to the nominee as a death benefit.
These plans are the most economical out of all other types of life insurance policies. Term life insurance policy offers a high sum assured at much cheaper premiums than other life insurance plans.
Despite their benefits, terms plan penetration in India remains low because of the misconceptions surrounding buying term insurance plans online.
Six misconceptions about buying term plans online:
1: Online term plans are expensive. You should buy the cheapest term insurance plan.
Fact: Term plans are one of the most economical life insurance products. You can get extensive insurance coverage at highly affordable premiums. With a high sum assured at economical premiums, you can be at ease in the present and adequately fulfil your family’s requirements. Moreover, you should not only buy the cheapest term insurance plan but invest in a comprehensive term plan that offers a host of features at cost-effective premiums.
2: Online term policy is not a good investment.
Fact: Term plans do not offer a maturity benefit. But that does not mean that they are not a viable investment. Instead, think of insuring the financial future and stability of your family. In case of your unfortunate demise, how would they cope with the expenses? With a termplan, you can be assured that your family will be financially secure even in your absence.
3: Young people do not need a term life insurance plan.
Fact: Many people brush off the idea of a term plan because they are young, healthier and have fewer financial responsibilities. However, life is uncertain, and an unfortunate event can occur to anyone at any age. Even though you have fewer financial responsibilities in the present, they are likely to grow as you build your family. Given today’s unhealthy lifestyle, eating habits, declining environmental condition, high stress, etc., even young people have become highly vulnerable to health issues. So, age is no principle to buy insurance coverage. The earlier you get the best term insurance plan, the better prepared you and your family are to face any unfortunate incidents in the future.
4: There is no need to buy separate insurance if you have a corporate term plan.
Fact: Corporate insurance plans offer limited coverage, strict rules with low sum assured and only until the duration of your employment. When you change or quit your job, your term coverage expires, leaving you and your family financially vulnerable. It is always good to invest in a separate insurance policy early in life. When you buy a term plan at a younger age, you pay lower premiums and get extensive coverage for all times, even when you are unemployed.
5: Buying term plans is complex and time-consuming.
Fact: Today, with the wave of digitization, online term insurance purchase is a few-minute process with no hassle and minimum documentation. You can easily buy a term plan online while sitting comfortably at your home. No more do you have to contact an agent offline or spend hours filling the forms, collecting documents, or understanding your policy. You can simply check the website of the insurance company, select your term plan, fill in basic details, choose your insurance sum and other features, provide minimum documentation, and pay your premium. On average, it takes only 10 minutes to buy an online term policy.
6: The claim settlement process is cumbersome, and insurers reject most claims.
Fact: As per the IRDAI report, the average death claim settlement ratio for 2019-2020 in India was between 85.3-99.07%. This means that for every 100 policies, only 15 got rejected. All other claims are successfully processed. The figures are significantly high and depict that insurers rarely reject claims. If your documentation is true and complete with no misrepresentation, then the claim process is very quick and smooth.
How to buy a term insurance online?
If you are looking for an economical and reliable term plan, consider the Edelweiss Tokio Life Zindagi Plus term plan. The policy provides a life cover inclusive of protection against COVID-19. In case of your unfortunate demise during the tenure, your nominee will get an assured death benefit. You can get the policy without any medical tests (up to the sum assured of ₹99,99,000) and with minimum documentation.
You can buy the plan in four simple steps:
- Select the coverage as per your needs.
- Choose the policy term, premium paying term, pay-out mode, and premium paying frequency.
- Choose your riders and extra benefits such as Waiver of Premium on Critical Illness, Medical or Non-Medical Underwriting Status or Better Half Benefit.
- Submit the basic documents required, and upon verification, your plan is activated.
As you grow old and require a higher sum assured, you can get a larger sum at attractive discounts on premiums. You can also pay all your term insurance premiums till the age of 60 or pay premiums until the end of the policy tenure.
Moreover, if you are diagnosed with a listed critical illness, the policy waives your future premiums. All term insurance tax benefits under Section 80C and 10(10D) of the Income Tax Act, 1961 apply to the Edelweiss Tokio Term Plan.
As a wise investor, it is advisable to invest in an online term policy like Edelweiss term insurance early in life to take advantage of its benefits and secure your loved ones against any eventuality.
Aastha Mestry - Portfolio Manager
An Author and a Full-Time Portfolio Manager, Aastha has 6 years of experience working in the Insurance Industry with businesses globally. With a profound interest in traveling, Aastha also loves to blog in her free time.