Guide To Buying A Term Insurance Policy Online

Term insurance, without a doubt, is one of the best ways to safeguard your family’s financial future. However, the buying process could be cumbersome - and if you are planning to buy it offline, the formalities can be a put-off, making you postpone your purchase.

Thankfully, we are living in a predominantly digital-driven age. Whether it is shopping, getting food at your doorstep, or talking to your loved ones - everything that once required you to step out of your house is now just a click away. The e-commerce boom has made insurance policies readily available at your fingertips too.

If you are confused about how to go about buying a term insurance policy online, this article will help you out!

The very first step involves deciding how much sum assured to choose. The amount you buy should be sufficient to cover your family’s short and long-term expenses in your absence.

The best way to find out how much cover amount will be appropriate for your family is to calculate the gap between what you will leave behind and what your family actually needs. In short, calculate the amount you owe ( short-term expenses, long-term financial goals, loans, etc.) and the amount you own (savings, FDs, investments, etc.)

The difference between these two amounts is the financial gap you need to cover through the term insurance policy. Remember to factor in inflation of around 6-8% on this amount - to ensure the cover you buy today is sufficient for your family in the future.

There are a variety of features, benefits, and customisation options available with a term insurance policy. With these options, you can design the policy exactly as per your and your family’s requirements. Here are a few common customization options -

Policy Tenure
This is the duration till which the insurance company will provide you with the term insurance coverage. Based on your future plans and goals, you can buy a policy for a duration of 60 years, 65 years, 70 years, and so on. Some insurance platforms also offer a term cover till the age of 99/100 years. You can select this if you want to buy a cover for your entire lifetime.

Premium Payment Duration
This is the time period for which you will need to pay the term insurance premiums. The premium payment duration can either be less or equal to the policy duration selected by you.
Here are the three most common premium payment term options available with term insurance -

• Regular Pay Option, where you will need to pay the premiums till the end of the policy duration you select.
• Limited Pay Option, where you can finish paying off your premiums in a limited number of years.
• Single Pay Option, where you need to make the premium payment only once - at the time of buying the term insurance.

Premium Payment Frequency
In addition to the premium payment duration, you can also customize the frequency of premium payments under your policy. You can choose from the yearly, half-yearly, quarterly, and monthly payment options.

If you can afford to pay large payments, you can choose the yearly payment option. If you can’t, you can choose any one of the other options.

Claim Payout Option
Term insurance also allows you to configure how you want your family to receive the claim amount - if you pass away during the policy tenure. The three most common claim payout options include -

• Lump-Sum Payout Option: Here, your family will be paid the claim amount in a lump sum instalment, in one go.
• Monthly Income Payout Option: Here, your family will receive the claim in monthly instalments for a specific period.
• Lump-sum + Monthly Income Payout Option: Here, a part of the claim amount will be paid as a lump sum. The remaining part will be paid in monthly instalments for a certain number of years.

Increasing Cover
If you choose this option, the sum assured of your policy will keep on growing automatically until it reaches a maximum limit specified by the insurance company. An increasing cover option is the best way to inflation-proof your term insurance cover. You can also select it if you are not eligible to buy a sufficient term cover for your family.

Riders
Riders are add-ons that offer extra protection and provide an additional payout under specific circumstances. An accidental death benefit rider, for example, will pay an additional sum of money to your family if you pass away due to an accident.

The riders you can select with your term insurance will differ across insurance companies. Here are a few common ones you can opt for -

• Critical Illness Rider
• Accidental Disability Rider
• Accidental Death Benefit Rider
• Surgical Care Rider
• Hospital Care Rider
• Waiver of Premium due to Critical Illness Rider
• Waiver of Premium due to Accidental Disability Rider

Next, you should search for a plan that offers all the features and customizations you want to buy. And, you should look for an insurer who has a strong and long track record and reputation in customer service and claims. You can go through the reviews of previous customers to find out if the insurer you are planning to buy from is good or not.

After you zero down on a plan and insurer, you can visit the insurer’s website and select the product you want to buy. You can fill in the basic details and select all the appropriate features, customization options, etc.

After you provide all the required details and select the customizations, you will get a benefit illustration, a document that will include details about your policy. You will either get an option to download this document from the insurance company’s website or the insurance company will email it to you.

The benefit illustration will give you an in-depth understanding of the term insurance policy you are planning to buy - like the policy tenure, premium payment duration, features, riders, etc. that you select, surrender value and maturity benefit (if any), etc. So, it is important that you go through the benefit illustration carefully before going ahead.

Here, the insurance company will ask you to provide several details that include -

Personal details, like your occupation, income, education qualification, temporary and permanent address, etc.

Lifestyle-related details like your smoking habits, alcohol consumption, hobbies, etc.

Medical details like your medical history, family’s medical history, surgeries or treatments you may have undergone, and so on.

Basic body measurements like your blood pressure, height, weight, etc.

Other details related to your nominee, future travelling plans, etc.

Please note, this is just an indicative list of the details you will need to provide at the application stage.

The insurance company will ask you to submit certain documents to support your application. Some of the documents you may need to submit include -

Proof of age such as PAN Card, Aadhar Card, Passport, Voting Card, etc.

Proof of income such as Salary Slips of the last 3 months, Bank Statement of the last 6 months, Employer's Certificate, Income Tax Returns, Form 16, etc.

After the application process is complete and you submit all the necessary documents, you will have to make the first premium payment. The premium amount will be determined on the basis of several factors like your age, gender, lifestyle habits, the cover amount you choose, policy duration you select, features and customizations you opt for, etc.

To ensure your premiums are transferred to the insurer directly during your policy renewal, you should set up standing instructions on your bank account. Make sure you don’t put standing instructions on a credit/ debit card, as the cards come with an expiry date - so, your payment might not go through smoothly.

You may also have to undergo some medical tests based on the declarations you make in the proposal form, your medical history, your family's medical history, etc. Some of the tests you may need to undergo include a blood test, a treadmill test (TMT), a drug test, an HIV test, an electrocardiogram (ECG), etc.

After this, your policy application will be evaluated by underwriters - a team of professionals at the insurance company. They will do a complete financial and medical evaluation. Based on the income and other documents you submit to the insurance carrier, they will assess how much coverage you are eligible to buy. They will also examine the details you provide on the proposal form as well as your medical test results to estimate the risk you provide to the insurance company.

After the underwriting is done, the insurance company may -
Accept your proposal and issue you the term insurance policy.

OR

Reject your proposal if your profile is too risky.

OR

Make a counteroffer - they may apply loading, i.e., ask you to pay a higher premium. If you pay the extra premium, the policy will be issued to you.

After the term insurance policy is issued and you receive the policy document, you will be given a free look period of 15 days, during which you can check all the details in the policy document and review the terms and conditions, limitations, exclusions, etc. If you are not satisfied with the policy features or the terms and conditions, you can return the policy. The insurer will return the premium amount you paid if the policy is cancelled in the free look period - after deducting certain charges like stamp duty, administration fees, etc.

The internet is not just a mere provider of information anymore. It is also a key channel that makes something as crucial and complex - as insurance purchase - easy. In this article, we have tried to give you a complete picture of how to buy a term insurance policy online. Here’s wishing you a fast, efficient, transparent, and well-informed purchase!