Life Insurance-The Ineffable
Ineffable means “too great to be expressed in words.” Now we have referred life insurance as ineffable for a reason. And the reason is quite pleasing. Life insurance is one such policy which gives a financial security to one’s family when he won’t be present to help them. At any cost, the wellness of family is what the breadwinner always wants. Life insurance policy helps to sustain this promise for the breadwinner when he or she is not able to.
Further let’s understand the right approach towards buying the right life insurance policy.
People can buy life insurance policies for various needs. It can be brought for savings or as a protection cover. It’s also a good investment for retirement benefits. One surprising fact is that products like ULIPs and insurance are looked upon as long term investment options. However, their very basic function which is to provide insurance or protection is ignored to large extent.
As discussed term insurance plan is a type of life insurance. They’re often criticized for certain things. One crucial factor is a dent in the distribution system. The distributors tend to sell policies unfairly. They sell policies just to obtain higher commissions by charging higher annual premiums to the buyers.
However, these plans are usually very cheap. For instance, one 40 year healthy person can buy 10 year of term insurance worth Rs 50 lakhs by just paying annual premium of less than Rs 10,000.
The rates of term insurance plans vary by around 40% across several companies. Hence, it’s important to carry a thorough research prior to buying.
An agent may not always be the best option for the following reasons-
- The plan recommended can be way expensive
- He’s more likely to recommend you something where he can get a higher commission.
Term plans provide low commissions to agents. Since, last few years, term insurance rates witnessed significant cut by 40-50% thanks to increased competition & lower mortality rates.
Why getting life insurance online is preferred?
- One can easily compare features and prices of several term insurance plans
- The process is simple & fast
- Most companies enable all documentation & medical test reports to be delivered to the insured’s home
- Most insurance companies favor lower commissions for online sales. Hence, you can get term insurance plans at lowest rates which can save you 30% money than the offline way!
- One can easily pay his premium via credit card or net banking
Good performance by the insurance market-
Internet and Mobile Association of India (IAMAI),in its report claimed that around Rs 600 crores worth of insurance premium amounts were paid online in the year 2010. This includes renewal premiums, new term as well as health insurance plans bought online.
Consider that the policyholder survives throughout the policy’s duration. In this case, the risk cover will be terminated. Therefore, there won’t be any amount paid to the policyholder nor his dependents.
However, if the policyholder dies during the policy period then a sum assured amount will be paid to the policyholder’s dependents. The insurer will pay the sum insured amount to policyholder's dependants or the one who is listed as the nominee in the policy.