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I have a term insurance policy. When I compared the premiums charged for online term insurance with that charged by private companies, I realized that the amount that I am paying is very high and I can get the same cover at a lower premium. Why is there a differences in the premiums? Do private companies have a lower settlement ratio? Should I move to cheaper plans?
You are asking all the right questions. Online term plans are cheaper by about 20-30%, primarily because the insurer does not pay distributor commissions on these products. Private companies have a lower settlement ratio than government-owned insurers. However, I do not believe that this is driving the low cost of online term plans.
In you are Internet-savvy, then move to a cheaper online plan. Make sure you purchase your new policy and have it in your hand before lapsing your existing plan. Since you will not have an advisor to help you fill out the proposal form, make sure that all details are filled in completely and accurately. Incomplete or inaccurate information is a major reason for claim repudiation.
I am 26 years old and I want to buy a life insurance policy. My annual income is Rs. 7 lakh. My parents and my brother (15 years) are dependent on me. I will get married in October this year. Should I buy a term plan, endowment plan or money-back policy? What should be the sum assured? What are the things that I should keep in mind before buying a policy?
First, buy a term policy to provide maximum security to your family. You should purchase a sum assured of about Rs. 70 lakh, which is 10 times your annual income, for a tenor of 30 years, which is the maximum term insurers provide. This term plan will cost you about Rs. 6,000-8,000.
You could consider investing into equity through a growth-oriented unit-linked insurance plan with a tenor of 10 years or more.