Purchasing life insurance can be a long-term investment. With so many insurance companies and hundreds of policies available over the internet, it is best to select the one that gives you peace of mind. Two policies with the same benefit term could differ vastly in premiums, policy periods, exclusions, and claim procedures. Selecting a policy based solely on the lowest premium will not ensure you are covered. You can research online to compare life insurance policies without moving a step out of your house. Here are a few things to keep in mind before taking a policy.
What Factors Should You Compare When Buying Life Insurance Online?
There is more to comparing life insurance policies than checking the premium displayed on an insurer’s website. Start by looking at what the policy covers, how long it remains active and what you or your nominee can expect under different situations.
Premium
Premium is usually the first thing people compare when looking for life insurance online. However, comparing two premiums only makes sense when the policies offer similar coverage, policy terms and benefits.
The premium calculator on the website provides an estimated premium based on your age, income, sum assured, and policy term. When comparing various insurers, it is advisable to use similar details for estimates.
While comparing premiums, check:
- Premium payable monthly, quarterly, half-yearly or annually
- Total premium payable over the policy term
- Difference between regular-pay and limited-pay options
- Additional cost of selected riders
- Applicable taxes and other charges, wherever relevant
A lower premium can make a policy more affordable, but it should not be the only reason for choosing a particular plan.
Coverage Amount
The amount of life cover should be linked to your family’s financial needs. Simply choosing the highest cover available or the amount that comes with the lowest premium may not give you a useful comparison. For example, a term insurance plan offers a significant coverage amount for life’s emergencies.
Think about the money your family may need if your income is no longer available. Existing liabilities, future expenses and the number of dependants can all affect the amount of cover you need.
You can consider:
- Your current annual income
- Outstanding home, personal or other loans
- Children’s education and other future expenses
- Number of financial dependants
- Existing savings and investments
- Inflation and expected changes in your financial responsibilities
A life insurance calculator can help you arrive at an initial estimate. You can then adjust the amount based on your actual financial situation.
Policy Term
A life insurance policy term refers to the time period during which the life insurance coverage continues in accordance with the policy terms and conditions. The importance of selecting the term is related to the fact that one’s financial obligations can last for years.
For example, a person with kids or a home loan that lasts for an extended period should consider how many years his family may still rely on his income support.
When comparing policy terms, check:
- Available policy durations
- Maximum age up to which coverage is available
- Whether the term covers your major financial liabilities
- Whether the selected term is suitable for your family’s expected financial needs
A longer policy term can affect the premium, so compare the cost with the period of protection rather than looking at either factor in isolation.
Premium Payment Term
The premium payment terms and policy terms are not necessarily the same. Depending on the product, you may be able to pay premium payments continuously for the entire policy duration or only for a limited time.
For example, you may choose a shorter payment term to your premium, so you pay it sooner but are still covered. This would result in a different premium and payment frequency. Look out for:
- Method of recurring premium payments
- Few options to pay via premium
- Choice of payment options available: Single premium
- Either the amount payable in each alternative.
- Effect of missed payments or stopping payments
A comparison of these options can help you find the most affordable payment plan for your cash flow.
Claim Settlement Information
Since the purpose of life insurance is to provide financial support to the nominee after the policyholder’s death, claim-related information is worth checking before buying a policy.
Insurers publish claim settlement information for their businesses, and this can provide useful historical context. However, don’t judge a policy based on a single figure. The terms and conditions of the policy, the details disclosed at the time of purchasing the policy, and the documents presented during. The process of making a claim is also important.
When comparing several insurers, always check for:
- Details about the claims settled in the last few financial years
- How to inform about and submit a claim
- List of documents required to file a claim
- Any help available for customers in case of a claim
- Channels of customer service in case of any concerns
Policy Exclusions
Policy exclusions are another detail one may miss when comparing policies online. These define the circumstances under which a policy may not pay, or may have certain restrictions. Read the exclusions and other important conditions as agreed upon by you and the insurance provider before buying the policy.
Pay attention to:
- Suicide exclusions and applicable conditions
- False information or information not disclosed
- Conditions for policy lapse and revival
- Rider-specific Exclusions
It is crucial to provide accurate information about health, lifestyle, and all other matters asked about during the application process. Providing wrong or incomplete information may affect the evaluation of claims.
Riders and Additional Benefits
Some life insurance plans may have features known as “riders,” which are add-ons that provide further coverage. However, there are usually additional costs involved in obtaining these benefits, and special conditions apply to their use. Examples of riders include:
Common rider options may include:
- Accidental death benefit
- Critical illness benefit
- Disability-related benefits
- Waiver of premium
- Other protection benefits offered by the insurer
Certain types of life insurance policies offer riders, which are additional benefits. Additional benefits usually entail additional costs and some restrictions on those benefits. Riders include:
Insurer’s Online Services
A seamless online experience, another practical aspect to keep in mind is – the smoother the online process, the easier it will be to buy, pay for your premiums and access your policy any time you need to.
Check whether the insurer offers:
- Calculators to calculate online premiums
- Purchase facilities for digital policy
- Premium payment and renewal via online
- Availability of policy papers
- Online policy servicing
- Customer support and complaints pathways.
It’s also worth noting that the online calculator provides an indicative premium. An insurer’s ultimate quote may vary once the insurer considers your application and completes its underwriting process.
Summing Up
When you compare life insurance policies online, it is not only about choosing the least expensive annual payment. Coverage amount, policy duration, payment frequency, exclusions, riders, and the insurer’s service count, too. Online calculators can help you compare the approximate premiums, but the decision should be ultimately based on your financial needs and the actual terms of the policy.
Make sure you take time to compare similar policies using the same parameters and to study the documents involved in the purchase. A sensible comparison can give you an idea of what you are paying for and whether this insurance provides the necessary level of coverage for your family.
