Everyone is busy with their tax planning. As is the norm, many people finish touching up their tax-saving investments in December - just in time to submit investment proofs to the employer - and one of the favourite investment options is buying insurance covers.
The task of buying insurance covers - both life and non-life - is going to be easier this year, as many insurance companies offer covers designed exclusively for online customers. Apart from the convenience, online insurance policies are also relatively cheap. However, experts warn against the casual approach to purchasing insurance online, and urge individuals to do their homework thoroughly, just as they would otherwise, before buying an insurance cover online.
"A clear understanding of one's insurance needs and ability to identify a product that caters to those needs are a pre-requisite for buying insurance online," says Rituraj Bhattacharjee, head - market management, Bajaj Allianz Life Insurance Company.
Why buying a policy online makes sense
Experts believe that many individuals buy online policies without paying much attention to what covers they should have. For example, for a young executive starting his career with an education loan to repay, a cheap term life insurance policy will be the best option. If the young executive is also a frequent traveller, he should look at buying a personal accident insurance policy, though the premium so paid does not bring any tax relief under section 80 of Income-tax Act. Put simply, the availability of a product online or the tax relief on such a product should not be the sole determinant while choosing an insurance product. First zero in on the product - say, a term plan or a health insurance policy - and then you can look for its availability online.
Compare and select
Finding information about various insurance products is no more a herculean task. Various insurance aggregators - sites providing information about competing insurance products - could be of help. You can key in inputs, such as date of birth, sum assured, and term of the cover, and in no time, you get quotes from various insurance companies. But a word of caution: the aggregators may sell data to the insurance company. You may start getting calls from insurance salespersons or your mail box will be full of promotional mails. Despite this, one can still use aggregator sites to seek information about the products one is looking for.
If you are buying a unit-linked insurance policies (Ulips), you can use the application launched by the Insurance Regulatory Development Authority, or Irda, to compare Ulips.
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The speed of transaction is not the only benefit involved in buying a policy online. Pre-underwritten products with no medical examination needed ensure immediate issuance of a policy in the 'pdf' format. The policyholder gets a soft copy of the policy in his mail and a document also reaches him in a fortnight. The soft copy includes the 'premium payment certificate', which can be used to seek tax relief. If there is a medical examination involved, the insurance company concerned gets in touch with the buyer to coordinate medical examination. The policy is issued after the insurer gets access to reports of the medical examination.
The ease of transaction is another advantage. "Customers can pay insurance premium using any one of the multiple modes available, which includes modes such as credit cards, net banking and bank cheque too. In case of payment by cheque, the policy issuance is subject to realisation of the cheque," says Amit Ganorkar.
While transacting online, most insurance companies as well as insurance brokers also offer support to buyers. There are options such as 'live chat' and customer care helpline to resolve your queries. But a word of caution: most companies offer such help or support functions only at pre-determined hours - say from 9 am to 9 am. This matters a lot, especially if you are transacting insurance for the first time online.
"An online purchase of insurance assures a standardised service experience along with pre-determined turnaround time, which may not necessarily be the case in offline insurance purchase," says Niraj Jain, CEO, www.insurancemall.in, an online compare-and-buy insurance broking portal.
When you buy a policy through an agent, your service experience is rather dependent on the agent and may change from time to time. Online transactions ensure a certain level of service.
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Both life and non-life insurance companies are designing insurance products exclusively for the online customers. Bajaj Allianz Life Insurance Company, for example, has offered IGain-III, a Ulip exclusively on the online platform. But a majority of the products on the online platform are also available offline. In the case of life insurance, term insurance plans - schemes that offer to pay a fixed sum insured to the nominee in case the life assured dies in the currency of the policy - are more prominent online. Insurance companies also offer these plans at lower premium than the offline policies, as they save on operations cost. Of course, there are Ulips launched online, too, offering buyers various investment options along with a life cover.
Health insurance and travel insurance contribute a significant portion of policies bought online," says Amit Ganorkar, national sales manager - direct, ICICI Lombard General Insurance Company. As non-life insurance products such as health insurance and personal accident insurance are more standardised compared with investment products offered by life insurance companies, the purchase process is fast. If you are buying a product that does not require medical tests, then it can be bought in minutes. For example, a young executive, say aged below 35, can buy a health insurance policy for a 2 lakh sum assured in less than half an hour.