The ease of purchasing financial products online has revolutionised how people buy insurance. Today, buying a life insurance policy online is a convenient, time-saving, and cost-effective method. However, making an informed decision is crucial to ensure you select a policy that aligns with your financial goals and provides adequate coverage for your loved ones.
Understanding the life insurance definition, policy terms, benefits, and hidden clauses can help prevent future complications. Here are some key things to check before purchasing a life insurance policy online.
Understand the life insurance definition and policy types
Before selecting a policy, it is essential to understand the life insurance definition and the different types available. Life insurance is a contract between the policyholder and the insurer, where the insurer provides financial coverage to the beneficiary in exchange for premiums. The major types of life insurance policies include term insurance, whole life insurance, endowment plans, and unit-linked insurance plans (ULIPs).
Term insurance offers pure life cover and is the most affordable option, whereas whole life insurance provides lifelong coverage with a savings component. Endowment plans combine life cover with savings benefits, and ULIPs allow investment in market-linked funds. Understanding the differences between these policies will help you choose one that aligns with your financial needs.
Assess your coverage needs
The primary purpose of a life insurance policy is to offer financial security to your dependents in case of an unfortunate event. When purchasing a policy online, evaluate how much coverage you need based on your financial obligations, liabilities, lifestyle, and future goals. Ideally, your sum assured should be at least ten to fifteen times your annual income. Additionally, consider factors like outstanding loans, children’s education, and retirement planning before deciding on the coverage amount.
Compare different insurers and plans
One of the biggest advantages of buying a life insurance policy online is the ability to compare multiple plans from different insurers. Instead of settling for the first plan you come across, use online comparison tools to evaluate the premium rates, benefits, claim settlement ratios, and exclusions of various policies. Insurers with a high claim settlement ratio indicate reliability in paying claims. Look for an insurance company with a strong financial background and positive customer reviews.
Read the policy documents carefully
Many people make the mistake of purchasing a policy without thoroughly reading the terms and conditions. Always go through the policy brochure and documents to understand the inclusions, exclusions, premium payment terms, policy duration, and other crucial details. Pay special attention to clauses related to suicide, pre-existing diseases, and lapses due to non-payment of premiums. Understanding these details in advance will help avoid any future disputes or claim rejections.
Check the claim settlement ratio
The claim settlement ratio (CSR) is an important metric to assess the credibility of an insurance provider. It represents the percentage of claims settled by the insurer compared to the total claims received in a financial year. A higher CSR indicates a better probability of claim approval. Ideally, choose an insurer with a CSR above 95%, as this ensures your beneficiaries will receive the payout without unnecessary delays or complications.
Evaluate premium affordability and payment flexibility
While choosing a life insurance policy, ensure the premium amount is affordable and fits your budget. Opting for a high sum assured with an unaffordable premium can lead to policy lapse. Some insurers offer flexible premium payment options, such as monthly, quarterly, or annual instalments. Selecting a convenient payment mode helps in maintaining policy continuity without financial strain.
Look for riders and add-ons
Many insurers provide additional riders that enhance the coverage of a basic life insurance policy. Some common riders include accidental death benefit, critical illness cover, waiver of premium, and disability cover. While these add-ons increase the premium, they offer valuable financial protection in unexpected situations. Assess your needs and select relevant riders to maximise your policy’s benefits.
Check the free-look period
Most insurance providers offer a free-look period, which allows policyholders to review their policy terms and cancel it if they find it unsuitable. The free-look period generally ranges from 15 to 30 days from the date of purchase. If you cancel within this period, you are entitled to a refund after deducting minimal charges. Understanding this feature ensures you have an opportunity to reassess your decision.
Understand the policy surrender and loan provisions
Some life insurance policies, such as endowment plans and ULIPs, allow policyholders to surrender their policy or take a loan against the policy’s cash value. However, surrendering a policy prematurely may result in a lower payout and financial losses. Understanding the surrender charges and loan facilities beforehand can help you make an informed decision in the long run.
Check for online discounts and offers
When purchasing a life insurance policy online, insurers often provide discounts on premiums due to lower administrative costs. Look for special offers and discounts available on the insurer’s official website. Additionally, some policies offer lower premiums for non-smokers or individuals maintaining a healthy lifestyle. Exploring these benefits can help you save on your policy costs.
Review customer service and digital support
A good insurer should offer efficient customer support to address policy-related queries and assist during claims. Check the insurer’s website for chat support, helpline numbers, email assistance, and mobile app features. Insurers with a user-friendly website and responsive support team make policy management easier for customers.
Avoid frauds and scams
While online insurance purchases are convenient, they also come with the risk of fraud. Always buy your policy from the official website of the insurance company or a trusted aggregator platform. Verify the insurer’s IRDAI registration number and avoid making payments through unofficial channels. Being cautious ensures you do not fall victim to online scams.
Conclusion
Buying a life insurance policy online can be a seamless experience if you take the necessary precautions. Understanding the life insurance definition, evaluating coverage needs, comparing plans, reading policy documents, and checking the claim settlement ratio are essential steps before making a purchase. Additionally, assessing premium affordability, choosing relevant riders, and ensuring secure transactions will help you make a well-informed decision. By conducting thorough research and selecting the right insurer, you can secure your family’s financial future with confidence.
