The need of life insurance can never be ignored. Now that LIC has launched its online term plan, there would be increased awareness along with increased competition in the market. This change will force other insurers to launch similar plans. LIC online term plan is likely to have higher premium. But, it will help in understanding the need of life insurance and process of collecting investment products that would subsequently help the people in differentiating the need of insurance and investment.
Term insurance is the oldest and cheapest life insurance plan offering death benefit. These plans do not offer any maturity benefit at the end of the policy term. Death benefit i.e. full sum assured is paid to the nominee only if the insured dies during the policy term. It comes with easy understanding which does not require any calculation of returns and charges and premium is the only expenditure. Whether insurance or investment, one must not forget that nothing is available for free.
With the new trend of online term plans, an individual enjoys 40% discount on premium in case of online plan when compared to the regular offline term plans as these involve agent’s commission, office expenses and marketing costs.
The plan targets well educated people thus the mortality experience in term plan is good. The targeted class offers genuine details about their family and themselves. The reasonable claim ratio is another factor that makes term plans’ availability at competitive rates.
Term insurance is the best way of securing your family’s future in case you die in your earning stage. Here are some points that can help you in the selection of the best term plan-
- Before finalizing the sum assured one should analyze the real need for life insurance. As per the thumb rule the cover amount should be at least 12 times of your annual income.
- Life insurance is basically for the earning member whose demise would bring economic loss to the family and not the non earning member like children.
- It is always profitable to have life cover till the age of retirement because the income source comes to an end after retirement.
- Before applying for online term plan it is important to check if your city lies in the list of selected regions where such option is available.
- It is advisable to mention all the genuine details when filling the form for term insurance like health history, existing insurance plans etc. Insurance functions on the trust factor hence it is good to offer apt details.
- It is essential to purchase term plan from the insurer you trust as there is no maturity value rather it is just for the peace of mind. Hence instead of the premium amount one should pay attention at his/ her satisfaction.
- Claim ratio of an insurance company is another important factor to consider. But as a matter of fact, if you have provided genuine details, then no company can reject your claim.
Just purchasing a policy is not your goal; it also includes having in depth knowledge of the policy like the exclusions mentioned in the policy. Like, suicide in first year of policy purchase is not covered by term plans.
It is necessary to inform your spouse or concerned family members about your insurance policy. You should also tell them where the documents are kept. Well, the online term plan helps in understanding the difference between insurance and investment. After purchasing online term plan you need to analyze your risk factor and then get into investment options.
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