Tuesday, June 19, 2018

Purchasing insurance online

Life is full of stages events that are exciting and uncertain. But whichever stage one is in it’s important to ensure that protection takes the centre stage. Life insurance is something that can protect your family’s financial security should something happen to you.

A must-have for your financial plan, it also helps fulfil your needs while you are still alive – like providing supplemental income for retirement, building a corpus for future goals, child’s education, marriage, a vacation abroad or a source of funds if you become ill.

But how do you opt for the right insurance if you do not have access to a skilled and knowledgeable advisor or the product is not available in your geography.

Today like any other product, life insurance is also available online and can be purchased with a single click. But the key is to keep certain critical factors in mind before opting for the product that best suits your needs.

Why purchase online: 

There is indeed a cost benefit attached to buying life insurance policies online. While, online purchase offers a customer ease of transaction anytime, anywhere; is quick and transparent; it also helps one buy the desired product at cheaper prices compared with the same product available offline.

 Life insurance products that are available online are 3-5 per cent cheaper than the ones available offline. Besides being cost effective, online purchase of insurance products offer several benefits to the customer. The purchase is transparent and one can get all the information about the product at one place, one can compare several products in one go to make the right choice, buy products seamlessly anytime, anywhere, opt for paperless transactions, and can track the purchase real time.

Who should buy online: 

A person who is aware of his/her financial needs and goals, has understanding of the benefits of insurance and is familiar to online transactions should opt for online purchase. But one who is either not financially aware or don’t have time to explore the insurance products online or is not used to online transactions, should opt for an agent’s advice. Insurance advisors help customers in analysing their needs, offer solutions and assist in opting for the suitable product.

In case you are prompt with internet usage and online transactions, you can definitely avail the convenient mode of purchasing a life insurance policy online.

Identify your needs: 

First and foremost, at the time of purchasing life insurance it’s important that the customer first understands his/her needs in order to identify and select the right product, reason being, insurance is a long-term product and needs complete understanding before one buys it. Once a person is conversant with his requirements and future goals he can go online, read all the offerings, understand the features of the policy, compare it with other products and purchase the one that best suits his needs. ( SEE MY additional NOTE BELOW)

How to buy online: 

Bearing in mind that there isn’t any advisor to handhold you with the purchase, it’s important to keep note of the following while buying a life insurance policy online.

Adequate research: 

There are host of products available today and in order to select the right product it’s imperative to compare and evaluate them at several parameters. The three main factors being, policy features, premium (cost of the policy) and claim settlement ratio of the insurance company. Something that equally matters is the brand of the company. Comparing policies on these parameters will ensure that you don’t end up purchasing a plan that does not suit your life requirements.

Accurate information: 

Just like offline, even during an online purchase you would need to fill up the policy application form. It is the most important step where you will have to be extra careful and ensure correctness of all the information provided by you. It’s prudent to disclose facts honestly about you and your family’s medical history and give accurate details about your social habits and lifestyle. If you fail to provide these details properly, your nominee might have difficulty at the time of claim settlement. Wrong and incomplete information can lead the insurance company to deny or reject the claim completely. Hence, it is prudent to be cautious at the time of filling up the form online and avoid mistakes.

Sufficient cover & right tenure: 

The biggest challenge for a person purchasing insurance is to select the amount of cover and the policy term or tenure. How much is enough? You should assess your exact needs, assetliability situation, financial condition, and savings; and then opt for the level of cover in the alignment to these factors.

Another factor to keep in mind is inflation. At the time of policy purchase you may feel that the cover will suffice, however, even an inflation of 5-8 per cent can impact negatively the value of the cover over a period. Hence, it would be prudent to go for enough cover or opt for increasing sum assured option.

Biggest mistake to avoid is to take inadequate cover for too short a tenure. The thumb rule to select the right policy term or tenure is until your retirement age. The life insurance policy should be active till your earning years and should act as a shield to your annual or monthly income. If the policy is being purchased to meet a desired goal such as child’s education or a trip abroad, the term should be until the date your goals are likely to be met. Online purchase of life insurance is convenient, quicker, simpler and involves less and at times no paperwork. So, evaluate your protection need and get covered in just a click. 

Above Article Replicated as published in Financial Chronicle – 11th June 2018 

MY NOTES at Various Points above-

While Buying Online Insurance is great to consider for one who is aware of his/her financial needs and goals, has understanding of the benefits of insurance and is familiar to online transactions, one has to do thorough research and calculations on 
A- Identifying your own Needs-

Alongwith this, Sufficient Cover and Right Tenure ( for Life Insurance cover ) is also of Prime Importance and thumb rule is till retirement, ,but what if your goals are falling post retirement or what if you are planning to retire early, or what if your income scale is too low to be confident to make assets to retire as per thoughts or what if one loan is continuing .
ALso, your GOALS has to be considered, while calculating Life Insurance Value and Ideally It is highly recomended to not take any riders with Life Insurance Policy and opt for Pure Policy that you have gone to search and take,


B - Doing Research on the Product to buy from The three main factors being, policy features, premium (cost of the policy) and claim settlement ratio of the insurance company. Something that equally matters is the brand of the company

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