15 years ago, as a Branch Head in an Insurance Company, when I discovered that term insurance made sense and wanted to share my discovery with my colleagues and relatives, they saw me as an impractical fool. अरे इसमें तो मरने में फायदा है , इसमें commission बहुत कम है , all of them chorused!. No returns, my learned Uncle dismissed me off.

That’s why I am getting impressed with the young professionals these days. Here’s a proof of that. A email from Praveen, my kid brother!:

Lately, I have explored Life Insurance policies and realized the pure term plans are the best way forward, with the highest Insurance amount at the lowest annual premium. Now that most private insurance companies offer to sell Insurance schemes online at very good prices, I am planning on taking up one of them in April.
Religare has the easiest online purchase mechanism and the best price as well. For Rs 4500 or so I could get a term plan for 25 years for 50 Lacs [How much is enuf?!].
However, I do know that no one can match LIC for guaranteed claims. Private players are quite behind in successful claims. But LIC charges 2-3 times the annual premium of private players for the term plan. So in this confusion, could you write an article on Term plans and recommend the best plans available? LIC also offers the longest insurance period at 30 years, compared to 25 of private players.

Now while the email clearly outlines a decision to go for online term insurance it also talks about the perception (erroneous?) that ” no one can match LIC for guaranteed claims. Private players are quite behind in successful claims ”

So while I applaud the buying decision, I do not agree 100% on the perception on the claims. The claim process takes a well oiled machinery which LIC has been running for 60+ yrs now. Moreover, insurance is a two way contract where if you are not hiding anything, the other party can’t refuse claims just like that. Some of the claims, I’m afraid are bad claims.

And you get a huge cost advantage for going online.

Some thoughts that I posted on the blog previously on this issue: Problems and Cheap term insurance

So would you recommend that Praveen goes ahead with the Religare online term insurance? Or do you have another factor to weigh in?

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Buying online is supposed to be a one click thing and with significant savings in distribution costs. But it ain’t that simple!

Here’s an account of Hitesh, an informed guy(after all he’s my reader!), who wants to buy term insurance online. But there are many hiccups along the way and he recounts them in his mails to me. Here it is:

ICICI Iprotect is one of the cheap online term plan, but not the best till now. It has many initial troubles, which the customers face, hence making it really useless one. I have seen lot and lot of customers that have taken it online and still not received the policy even after 2-3 months and that too after constant follow up and complains (Some have taken there money back and others are waiting for it).
It seems ICICI is not much concerned about it and hence its reputation. It makes everyone think that when customers are having that much trouble just in getting (buying) the policy, what will happen in sad incidence of claim, that to, which will be done by wife / children in your absence.

I have done some initial study on these term plans and finds that Kotak is little better then ICICI in terms of getting the policy without much follow up and has exactly the same premium as that of iprotect for male of 30yrs. There is also Metlife term plan (Met Protect) offering same type of plan in same type of premium (it has the advantage that you can take policy up to 35 yrs; of course with extra premium.)

Now deciding which is the best out of these 4 companies is what I am still unable to do.
1: Religare Iterm
2: ICICI Iprotect
3: Kotak Eterm
4: Metlife Metprotect

Can you help? I was going for ICICI, but seeing customers in lot of trouble/harassment and getting there policy canceled, I withheld my decision to go with ICICI with the time being.

Subsequent Mail:
I tried to buy it from Kotak, and can you believe they have Delhi & NCR as the city and, when we fill in the details like my address and my company address, it takes Delhi by default in address and does not give option of Noida and Faridabad. And it cannot be changed there.

And when I asked there Customer care, (1800 209 8800), he was most useless fellow, he first said, its not available in your city, then he said, NCR, you can cut the address in the print out and write there manually your city, and sign, then i asked there won’t be any problem in future, he said, you cannot buy it.. I asked why its written NCR then, and how you say its in 52 cities. He said you cannot buy it.

This is the type of experience I have just before I can buy the policy.
And that person was taking like he was doing a big favour towards me by talking with me, and I am the seller and he is the customer.
Very unprofessional of him.

Now what you suggest, should I go with ICICI. Also ICICI customer care was comparatively better , Actually there buying policy did not allowed other then credit card or there own (ICICI) bank net banking. I wrote to them and I think after a week I got a call that all other online banks are available now and you can complete your buying the policy.
My ICICI experience is better this time.

This is a real account of a net savvy guy trying to make an informed decision. But the level of services leaves much to be desired. Infact I tried to use the Premium Calculator on Kotak’s website and they asked me to get Internet Explorer! It did not work on Firefox!!

I had a feeling that ICICI would be technologically more advanced than the others and Hitesh experience validates that. But is that reason enough to go for ICICI iProtect?

Can you help Hitesh by sharing your experience? Thanks

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Here’s a repost of an article on term insurance (posted on my website). If you want the cheapest term insurance, you can buy ICICI Pru’s iProtect term insurance online. Before, we go on to describe the features of the iProtect policy, it’s important to remember that buying an insurance online has certain limitations. Like, if there is any trigger for claims, who will do the leg work for settlement of the claim.

But if cost is the only factor for deciding your insurance policy, ICICI Pru’s iProtect is affordable and available online. You may also like to check Aegon Religare’s iTerm

An individual can apply online for iProtect and the payment can be made either through his/her internet banking account or credit card. The life cover commences as soon as the premium is paid. Upto a certain limit, life cover can be bought immediately without the need for any medical tests.  Above this limit also, the entire transaction can be finished online but the cover will start post a medical test.

Download the product brochure

The policy can be done bought completely online as no physical documentation is required.

iProtect provides financial security to the family of the policy holder in the event of his untimely death. In case of such an eventuality, the nominee will receive the entire sum assured.

The entry age for a customer is a minimum of 20 years and a maximum of 65 years with a minimum policy term of 10 years and a maximum of 30 years. The maximum age at policy expiry is 75 years.

The premium that you pay is very affordable and the cost savings due to the product being available online is passed on to the customer

Our View:

Buying a cheap product sounds good, but has its own limitations. The insurance agent does earn commissions for selling a policy but he also provides useful services. To our mind, it’s more important to find the right agent or advisor instead of focusing on the cost benefits.

Questions? Please email us on editor@personalfinance201.com

Feedback as always is welcome!

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Huebner (1964) postulated that the optimal sum assured for a working individual should be equal to the displacement cost of his life to his family/dependents. The HLV of a working individual is therefore measured by the discounted present value of expected future earnings over the residual working life minus his own consumption needs.

This idea is undoubtedly appealing and quite naturally there is a vast literature that discusses, refines and prescribes it.

Read about the pros and cons of the approach in detail on PersonaFinance201.com

HLV concept must be suitably adjusted :
• To account for notable changes in income & consumption levels
• To sync with reducing working life span.
• To match type of product to specific needs.
• To take into account that buyers often view insurance as an investment product also.
• To suit the payment capacity of the individual.

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