Buying Life Insurance Online? Avoid These 4 Mistakes

Buying insurance online has become extremely popular in the recent past for a host of reasons - convenience, lower costs, no agents, etc. It is also a lot quicker, simpler, less cumbersome, and involves lesser paperwork compared to the conventional method of insurance purchase. All you need is basic internet familiarity and an internet connection and you can purchase a suitable life insurance policy in no time. But there are certain things to bear in mind while buying life insurance online. Therefore, be careful in order to avoid making mistakes while buying life insurance online.

Read more
Get ₹1 Cr. Life Cover at just ₹411/month*
No medical checkup required
Save more with upto 10% discount
Covers COVID-19
Tax Benefit
Upto Rs. 46800
Life Cover Till Age
99 Years
8 Lakh+
Happy Customers

*Tax benefit is subject to changes in tax laws. *Standard T&C Apply

** Discount is offered by the insurance company as approved by IRDAI for the product under File & Use guidelines

Get ₹1 Cr. Life Cover at just ₹411/month*
No medical checkup required
Save more with upto 10% discount
Covers COVID-19
+91
View plans
Please wait. We Are Processing..
Get Updates on WhatsApp
By clicking on "View plans" you agree to our Privacy Policy and Terms of use & consent to Policybazaar to access your credit report

1) Scant Research

The policy’s cost (premium) and the insurance company’s claim settlement ratio are the two main factors on which people usually base life insurance purchase, mainly because this kind of insurance is a straightforward product with more or less similar features. While buying life insurance online, it is imperative to thoroughly research, evaluate, and compare various plans offered by different companies and those listed on aggregators’ sites too, before zeroing in on the most suitable and cost-effective policy. This will ensure you do not end up settling for an average insurance plan, thereby avoiding one of the major mistakes while buying life insurance online.

2) Information Inaccuracy

Whether online or offline insurance policy purchase, the first step is filling up the policy application form. When filling up the application form while buying life insurance online, you do not have an agent to guide you and oversee the accuracy and correctness of your details. You therefore need to be extremely careful and ensure all the details entered are accurate and correct. During claim settlement, the insurance company could outright reject a claim if it comes to light that key information provided is incorrect, or has been deliberately misstated or withheld by the policyholder – this would be tantamount to suppression of key facts.

Disclose facts honestly about yours and your family’s medical history, and make a clear mention about your lifestyle and social habits. Wrong and incomplete information could lead to the insurance company denying insurance completely, or in a worst-case scenario, there may even be fraud allegations if the policyholder has lied about or hidden key facts.

It is crucial for you to disclose all facts correctly, failing which your dependants will have a difficult time handling the claim when the time comes. Moreover, since it is an online policy, they cannot even get an agent’s support to fight their case. This can be one of the significant mistakes while buying life insurance online and should be avoided.

3) Too Large a Cover, Too Long a Tenure

The popularity of online insurance policies is rooted in their low costs/premiums. However, this very advantage can ironically become the biggest disadvantage sometimes – looking at the low premium rates, buyers may end up opting for a much larger cover than they actually require. Therefore, the extra premium paid becomes a waste of money directed towards something that is not really necessary. Avoid letting low premiums guide your decision while buying an insurance policy. Assess your exact needs, your budget, your asset-liability situation, and then decide on the level of cover in alignment with all the influencing factors.

Another common mistake while online term plan is taking a cover for a very long tenure, sometimes even extending to post retirement years. It is better not to take a policy that stretches beyond your earning years, as this will cause unnecessary financial strain.  

4) Too Small a Cover, Too Short a Term

In contrast to the above mistake is taking inadequate cover for too short a tenure. While buying the insurance policy, you may feel that a certain life cover amount will suffice at the moment, however, even a nominal inflation of 5-6% can whittle down the real usable value of the cover by almost 50% over a ten-year period. It is therefore wise to purchase a large enough cover, which factors in inflation in a practical and comfortable way. 

Another one of the mistakes while buying life insurance online is to buy an insurance cover for too short a term. If the policy you have purchased ceases when you step into your 40s, it serves no real purpose, as it means that you remain insured during the low-risk and healthier years of your life, but are not insured when your liabilities and health risks are the highest. Adding to the complication is the fact that the cost of a fresh insurance cover is directly proportional to a person’s age – higher the age, higher the cost, because health risks increase with progressing age. And that is not where it ends – in the unfortunate event that you develop a serious medical condition, you may even be denied insurance altogether. 

Written By: PolicyBazaar
You May Also Want to Know About
Types of Deaths Covered & Not Covered by Term Life Insurance
Types of Deaths Covered and Not Covered by Term Insurance When it comes to securing the future of your loved ones or doing proper financial planning, term insurance turns out to be one of the most popular options for insurance seekers. With affo...
Why Medical Test is Important in Term Insurance
Why Medical Test is Important in Term Insurance ‘No medical tests required’, you will find this clause blatantly used as a catchy ads for a prospective buyer. But is it really worth buying a term insurance without undergoing medical tests? ...
10 Questions You Should Ask Before Buying Term Insurance
10 Questions You Should Ask Before Buying Term Insurance There are various doubts faced by customers when it comes to buying a term insurance plan. They get unsure about how claim settlement would work in case they have more than one term insuran...
Term Insurance for NRI in India
Term Insurance for NRI in India Term insurance offers financial protection to the family of insured in case of demise. Every bread-earner wishes to offer financial security to his/her family in some way. In addition to Indian citizens, NRIs (Non...
6 Reasons Why Term Insurance is a Must Buy
6 Reasons Why Term Insurance is a Must Buy Life is short and one can never foretell what the future holds. To make sure that your family is financially secure even after you are gone, opt for a term insurance. A term plan helps you prepare for...
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL