Switch to an online term plan, pay less
Published on: 10 January, 2012
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Thanks to the advent of technology, the costs of cost of insurance as well as sundry costs such as agent commission, operational costs and other administrative costs have shrunk considerably. Now if you buy a term plan online, for the premium mentioned above, the same person can get a cover of Rs. 85 lakh or he needs to pay just Rs. 4,550 for the same cover of Rs. 50 lakh.
Given the reduction in premiums, it makes sense to switch to an online plan. However, this is not a blanket rule that applies to all. Weigh your suitability before you tread that path.
Who should switch?
SA term plan is a plain vanilla product that only charges the cost of insurance from you. So if you die during the term of the policy, your beneficiaries get the sum assured; if you survive the term, you get nothing back. Because of its nature—you get pure insurance against a premium—it makes it easier to hop on to a cheaper plan, provided you get one.
If you are below 45 years of age, you stand a good chance of getting an online term plan without much problem. Not only is the underwriting process of the insurer kind to you, you gain the maximum if you switch at a younger age. For example, a 30-year-old will need to pay a premium of Rs. 12,326 for a term plan for 30 years, if the policyholder chooses to lapse the policy in the fifth year or when he turns 35 years old and buys an online plan, for the same cover he will need to pay a premium of Rs. 7,150 for the remaining 25 years. Over the entire tenor, he would have saved about Rs. 1.29 lakh by switching to an online term plan. Similarly, a 40-year-old will save Rs. 1.04 lakh if he makes a switch after five years. Read More---->
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