Term Insurance cheapest….
Here is a mail from a reader Aparna. I cannot profile her, I know not. Assuming she is a typical middle class person…her experience is interesting. Looking for comments from readers on what she should do…
“Want to share my experience with the readers and Subraji.
2 years ago I and my husband bought amulya jeevan (LIC) for 50L, at that time online term plans were not so popular and my neighbor, an insurance agent convinced me that there is no guarantee about claim settlement with online plans.
Recently wanted revise the coverage and decided to go for online plans and stop LIC term plan. Faced lots of doubts.
1. On what basis to choose the company?
According to this blog it is the cheapest, but I am afraid to buy based on that constraint alone. So, decided to go for 2 policies, one based on lowest premium, one based on supposedly high claim settlement ratio, trusting the numbers published. Chose bharti axa eProtect and hdfc click2protect.
2. How much coverage needed?
I know the method to calculate the insurance requirement considering expenses, asset accumulation, inflation, return on corpus etc etc. But the number such a calculation gives will sound good now and will look small after 5 years because of changing numbers in the above metrics. Hence dump all the calculations and go with a gut feel. Have some crores of insurance.
Now, coming to the process of buying!
Had posted a query on policy bazaar, so started receiving calls. Asked them why should I buy through them, they said they’d help in making a better choice (which they did eventually, somehow wasnt aware of bharti axa plan and was about to end up with aviva) and make sure I get policy document in hand without hassles. According to them, there’s no increase in premium if I buy through them, as they are paid by the company and not me. I dont know how to verify this, i am yet to buy.
In between, got calls from HDFC saying that they came to know about me from policybazaar and they would fix appointment. I said i want online and not through agents. They said they are not agents, but hdfc standard life and hence it wont cause any increase in premium. Yesterday evening I had an appointment with some Ms. N. She asked me first if I want to go for children plan, I asked her why she is asking me that when I am clear about wanting a term plan. I asked her why cant they help common people to buy term plans instead, to which she said she does help. Anyway, let me not digress.
She asked me to go to hdfc standard life site, click on ‘are you agent’ link and enter her agent code. Proceeded with the whole process and for 50L premium without tax came to 5382, whereas from the table, it should have been 5200. I asked her why this increase, whether it is for the first year alone, she eagerly said first year alone. After the completion, in the policy proposal form I saw premium as 6047 (inclusive of tax), and there is no mention of lesser premium in subsequent years. I told her, “I dont think it is lesser for later years” and she said nothing. I could have sent her back saying I would like to do it myself, but i felt that is mean of me after calling her home. But I dont understand this model, whether they are agents or employees. She had an ID card and visiting card from HDFC Standard Life.
And I consoled myself saying:
1. When God has given me an opportunity to do charity, I shouldnt crib about 182 Rs * 20 yrs = 3640 of charity.
2. This is not exactly only charity. Look at the complaints of people who tried to buy by themselves! She is going to help you with the process, like fixing medical tests etc !
(Read it in sarcasm)
I am not under illusion that she will be of help in claiming, in case of unfortunate event.
I am yet to buy from bharti axa. Would be of great help if someone tells me if I should buy on my own or through policybazaar. Definitely wont buy through any bharti axa employees.
Somebody please advise soon.
Post Footer automatically generated by Add Post Footer Plugin for wordpress.
Some unhelpful wise cracks:
1. Deciding to buy term insurance is easy. The process of actually buying the insurance is not that easy.
2. I have amulya jeevan too with a premium which looks obscenely high. Out of sheer fear of repeating the term-insurance-buying process I am putting off the switching process which Aparna is proceeding with.
3. The lazy me is hoping that LIC will proactively bring down the premium some day.
Hi Subra,
Online means truly online and the best way i found was to go through the websites of individual company and fill the same. I have brought term plan for me and my better half from Aegon Religare. The process was really easy and it took less than 2 weeks for it to come in hand (including medical tests for both). For our age (in 30s) Aegon was the cheapest.
My suggestion to Aparna is
1> Policy Bazaar or any sites that give comparative information use it for information only. Ignore any solicitation request. Pick the cheapest top 2.
2> Check if any known companies are missed and check there website. You can find a list here http://www.terminsuranceindia.org/know-your-term-insurance-provider-in-india.html
3> Shortlist based on premium and features and availability in your city.
4> Check experiences of people of buying it. (jagoinvestor, tflguide etc)
5> Complete the online process and follow-up online.
Sambaran you are living in paradise. I am sure you what what I mean!! Sorry but a LIFE INSURANCE company will never, ever, ever, reduce premium in TERM insurance. It is not a profitable product. Yes in 10 years they may decide to INCREASE the sum assured – say from Rs. 1 crore to Rs. 1.1 crore – thus telling you that they have reduced price.
Remember sites like Jagoinvestor also have a vested interest – of being a financial planner and advertising, so it is possible that their editing policy might have a bias. Just be warned. Check mouthshut.com also – it has a business of giving views on products.
Also many/ most companies have a brilliant social media plan which manipulates views on the NET. So read, but carefully.
the person from Hdfc standard life is an agent. She has beautifully broken into the system and collected data. Speaks a lot about the data security of Hdfc standard life insurance – it is simple data leakage. Saying it does not matter is like saying. It is a big company so if one employee steals Rs. 1500 from petty cash, it will not matter. Sorry this is cheating. Plain cheating Aparna, you should complain to the branch manager with a cc to the managing director. Branch manager may be hand in glove with Mrs. N….!
These agents are also calling people to offer same online term insurance plans offline also – another way of cheating customers.
I’ve also written article on same at http://www.investmentkit.com/articles/2012/09/do-not-buy-online-term-insurance-through-agents/
I bought a term plan for 50L through online and have gone for a one which is cheapest / good claim settlement ratio. However, it has taken more than a month for me to get the papers. In fact, I need to follow up with the branch office for my paper to move. Now, my opinion about the company has drastically came down.
I would like to go for another term plan but I am hesitant to take that trouble of following up and completing the process.
Yes, in my case also, I have got 4 / 5 calls from HDFC informing about their term plan and asking for appointment. I have told them that I am going through online and hence I dont require any help. However, there are few calls which will confuse the person whether to take their advice or not. In my opinion, somebody is leaking our informtion and intermediaries are taking advantage of the situation.
When it comes to informed customers about banking, insurance and investment, by way of experience or training, the Agents/Brokers/RMs surely recognize that usual deceit methods would not work. Knowning they can not trap and usual tricks fail, they would immediately switch over to ‘Tip’ Service. These guys then provide you decent assistance and makes you feel sorry for them if you part without any benefit to these guys.
It could be the agents experience that they lose out the customers if they reveal upfront, however an informed customer gets hurt that knowing everything with painstaking research, they lost the bargain even it is a very small amount. It is certainly an awkward situation for the buyer and joy is not felt in the end.
Minal, thanks for your warnings.
I am a bit puzzled why you made the connection with JagoInvestor? I do not remember seeing any life-insurance article there which biases people towards Amulya Jeevan.
Dear Aparna, online plans started sometime in 2007/08. I was ‘initial adaptor’ and took it, the experience even at that time was same, got the policy in hand in about 2 weeks. The cost was about 1/3rd of LIC.
Subra has earlier given some clean advice – ensure you are filling the forms properly and nothing hidden therein. I mentioned even minor ailments (mine/family) just to give them full benefit of any doubt at the beginning itself.
One tends to get anxious on term plan decision – specially because we are looking at the “crore” figure – since our life depends on it!!
When govt is looting you left and right, we dont say anything, while some small fish charges 180/- more then we plan to approach branch manager, managing director, ceo, irda, president, hmmm.
Well, my piece of advice don’t go with policy bazar. I payed premium and all medical tests reports but never saw my policy. Lost 9000 (approx.) in process. Don’t use policy bazaar at all.
Wonderful research. However agent has advised you and helped you. So
1) Call agent again. Ask her how to get the cheaper plan. Say that you *will pay* for her advise. Ask any more questions you have.
2) Pay her ~ 2000 Rs upfront as fees for her service. (this is better for her as upfront than 10 year trail of 3000 Rs)
Win-Win ?
Shiva,
There is no question on service fee payable to agent here. Infact, this is the case of cheating. Here, the customer Aparna called company to seek help of employee and not agent. The agent represents herself as the employee of the company.
1) Get hold of an LIC agent
2) Buy a term policy & a small endowment policy from him. This provides him enough motivation to pursue your policy.
3) Cancel Endowment after 3 years.
4) Subras of this world wont agree with me, but this works with minimal wastage of time.
I bought i-term from Aegon Religare some months back. It was a hazzle free process, but they took nearly a month to sent the policy document.
HDFC online term plan (Click2protect) is 3 % costlier if purchased through an agent. The agent will come to your place, fill the form on your computer / his laptop. Then he will follow the process – medicals etc.
I don’t know how much commission HDFC life pays to the agent.
This 3 % figure is official. It is buried somewhere in the policy document.
If you add 3 % to Aparna’s online premium of 5200, the result is 5386, close to the figure quoted by the agent.
PS – I am not an agent. But, just like Sambaran, I was postponing the term insurance. Finally I got the plan because the agent was persistent enough. He had actually visited me for term insuracne! Can you believe it!
I am an advisor with ICICI pru..I sell only online term plans.
the online option gives you a choice of doing directly or thru an agent for a 3-4% premium.This is a small price to pay for getting assistance and convincing people to take term insurance as all are not readily willing. We are, as a country heavily under insured.. The commission we get is 60% lower than what we get for an offline policy..
But, why are we not asking govt to sell petrol/ diesel also directly..without the dealers..surely we don’t need recommendation and advise for that.. Or for that matter ask HLL Nestle and Pharma companies to sell directly without intermediaries..Surely the saving on petrol/ diesel alone will be good enough to go on a overseas holiday..
Why is everyone picking on the financial distributor alone ?IF someone has been misguided or cheated ..they have themselves to blame..get educated!!There are lots of us doing a good job of educating lots of people out there..
Hdfc click2protect is 3.5% costlier if bought thru Agent.
Agent is paid 35% commission for first year only.
no renewal commissions.
I bought 55 lacs term insurance from Aviva. All the customer care excutives are quite freindly and help the online process done while still on the phone line. They will call you so you need not worry about the call charges.
Why 55 lacs? becuase medical comes free of cost for any term plan greater than 50 lacs.
Try aviva. My experience was good with them. I still get emails about where my investments are going and all.
I have selected edelweiss tokio term plan with riders. The cheapest plan ever. Pay for 15 yrs. and get cover for 30 yrs.
for age 35 sa 50lack premium comes around 8000 with riders…
Can anyone suggest better??
Praveen,
it is not about needing an agent, it is about having a choice. When I go to a railway station / airport am I being forced to pay a porter? Not even 1% of the agents are worth the amount paid to them. You can by pass the distributor by going directly to big retailers like Metro. If you want a term insurance for say Rs. 10 crores, fly to Hongkong (or wherever) and take a policy – one time payment, simple. I should have the direct option – whether it is mutual fund / insurance. Paying 40% commission still happens, and that is EXACTLY what the company wants to sell. Agents, companies, BOTH hate the term buyer…but alas, the smart investor knows his onions.
Hemal, consider following points also:
1. Check premium for above 50 lacs also. Some companies offers less premium, if S.A. is more than 50 lacs.
2. Go for medical tests, even if you have to take little higher S.A.
3. Compare premium with Bharti-AXA eProtect.
Also, claim settlement ratio is one of the major point while choosing term insurance plan. After all, it’s only death claim amount here, no maturity value.
Hope it will help you.
Hi Aparna,
Most of us would be in the similar position like you. I too have LIC policy which was taken long back and premium is very high. Since I understood that I need to cover for more coverage, I too selected the online method. Let me tell you why I did it:
1) Cheapest
2) Worried about claim ratio; but if we give genuine details there is no way the claim can be come down. I believe this.
3) I read that according to Indian laws, an insurance company cannot bankrupt. Even if it does so, government will assist to sell it to another insurance company and that insurance company will continue to provide the same policy without any changes. But I need someone to confirm this statement.
So, Aparna here’s what I could suggest to you:
1) Be honest in your policy proposal particularly your current existing policies and any medical conditions you have or had. Buy Bharati through ONLINE.
2) Send an email to HDFC customer service and ask them what would be your premium from next year onwards.
==> If it is 5200+tax, no need to do anything
==> If it is >5200+tax, then if the policy is purchased less than 30 days(Lookback period) check if you return now how much you lose. Then based on that you decide whether to discontinue this policy this year OR next year and get an online one BY YOURSELF.
All the best!
Mine experience with with policybazaar was little bit different. I filled all the details and the mobile no of my elder brother. The no is registered in NDNC DND for all and thus got a popup saying no is registered under DND, asking permission. I denied and gave mine no. Within 1 hrs both us got a call from policybazaar even when I didnt allowed them to call elder brother’s no. When I pulled the policybazaar salesperson for calling my brother, h said that it is their policy and they ere calling just to confirm, when infact they are legally not allowed to call.
So according to my experience even policybazaar can be a suspect of leaking information as well.
Is policybazaar multi company or just an agent for Bharti Axa? I am not sure
I’m an Aviva customer. I’m very happy with their service. They just came out with a chat application. I use it when I don’t feel like calling the agent. Very useful app.
Aviva’s service is much better than LIC or HDFC.
Minal
I am glad people are enlightened today about term Plans.. They have been in existence for so many years thru LIC and also with the Pvt players. It is only after they became CHEAP through online options that ” Enlightened people ” started buying them.. I can take a poll on how many people had a decent Term insurance 5 years back..I am sure not even 5% would have had it..Today Everyone is talking about Term Insurance because the prices have dropped..That is not Financial enlightenment.. That is bargain hunting..
What coolies.. you have a choice to carry your own luggage? I said why dont you go to MRPL or some other refinery and Buy Petol and Diesel directly ..ask them to open outlets and sell petrol/ diesel..why have dealers who take a cut of 1-2% on every litre of fuel sold..why dont people demand this..?Do you have a choice here?
Praveen you are an agent and it is hurting that your 40% commission days are over. Nobody likes to give up. I do go directly to Jet Airways and Indigo for my tickets. I do not need an agent to buy mutual funds, or life insurance. It is too painful to go to a post office, so I will use an agent – knowing that the agent is not affecting the yield. I seriously want to know how many agents go to a financial planner, and how many agents are ‘adequately’ insured – 20 times the income as the industry says.
Hello,
First of all, thanks a lot to Subra for putting my comment as a post here. Also, thanks to everyone who responded. Got numerous suggestions, and hence was more confident to confront Ms. N on the topic.
My profile: I am a software professional working for HP-ISO, with more than 7 years industry experience. I did my B.E from KREC Surathkal (Now NITK) and M.E. from IISc. I am originally from a village near Mangalore, now live in Bangalore with my husband and a 3 month old baby. Our total annual income is 20+. Both of us were careless about personal finance until marriage, marriage made me serious about financial planning. We got benefited from this blog and jagoinvestor.
There has been some progress with my policy. She came home and collected my documents, and convinced me that her services are essential to me. She told, “Ma’am, you are getting services for this extra premium. If you do it directly, it’ll take 3 months”. I asked, “So you are telling me, system is designed to help you in making some extra bucks?”, “Ma’am, I am not getting any money, that’s going to your policy only. If I do some 1L worth children plan, I get 1k as my commission, here I dont get anything”. “What about not telling me before about this extra premium?”, “Ma’am, I thought call center guys had told you about it. We are not agents, we are employees. Call center books appointment and they are supposed to tell you the details. If you don’t want my services, you can cancel the policy without any penalty. I am not insisting you to take”. But didnt understand why like Jayaraman V wrote above I was getting several calls asking me if I need an appointment. Like Minal and Jayaraman wrote, one person might be providing info to several people and each is trying to catch the fish.
With policybazaar I guess, it depends on your luck. People I spoke to seemed helpful. But their help was not really necessary; as Vijay wrote, it is enough to use them for their comparison chart and not to do the deal. Provide a dummy no in their portal, as of now they dont verify the phone no. Soon verification might start.
I asked this ‘friend of mine’ Ms. N about the policybazaar model of operation, she told that for every policy coming from policybazaar, her company pays it a one time fee of Rs 500. Here the good thing is it is not charged to the customer.
I applied online to bharti axa all by myself and the process is going on very smooth. Same day my husband applied to HDFC without this agent’s help and didnt get any response to his query to call center, “Did not get the proposal/illustration form by mail”. Then my husband wanted to cancel the policy. Called their toll free no and mailed to onlinequery ID. Should wait and see if we get the refund soon. Some of their call center employees have trouble understanding the issue. HDFC is surely not worth the high premium it is charging. I am going to cancel the policy. It is too painful to get reminded of this event every year when I pay the premium. Aviva is 1.5k cheaper than HDFC and as many of you and Subra say, when we disclose everything properly, claim settlement ratio is not relevant in choosing. Customer service becomes far more important.
Some lessons can be learnt only through one’s own mistakes!
Thanks and Regards
Aparna
Dear Aparna, let me share you my experience. Last Year in the month of Nov. I applied for Aviva’s I-Life policy (the online one). The whole process was very smooth & the Team Aviva was always in touch with me constantly on mails as well as phone.
Due to my Job profile (By profession I’m a chem. engr. & works in a fertiliser production unit), the underwriters of Aviva, loaded up my prem. but I accepted the same happily.
The only issue if I can say was faced during offline payment of this loaded up prem. at local branch of Aviva.
Till date, I have not faced any issue & ‘m very happy with the over all service standards.
Thanks
Ashal
Subra
You should do a survey among your readers as to how many had a decent ( 25-50 lacs )Term Insurance before the onset of cheap online options..In India people always like cheap..Since the online term plans have made term plans cheap..there is a sudden clamour to get one..By the way I don’t sell much insurance and it is not hurting..I started as an IFA 2 yrs back.. after the entry load ban..I am only pained to see that there are still a number of educated illiterates intent on doing direct investments in stocks, Mf and insurance..without fully understanding the risks .. The huge inflows during bull markets and poor inflows during bear markets are enough proof..
Dear All,
Hi
I represent the brand Marketing team of http://www.Policybazaar.com and can offer you little help and reassurance here.
Policybazaar.com is just a search engine wherein we try and connect you as a customer to the insurer. To do this we display plans on our site and assist you through the buy process just like an agent would do. The only difference here being we allow you to fill up the form at your leisure without pestering you too much.
The proposal form is required to be filled in by you, as the information as filled in the same also forms a part of the claims process in the eventuality of you filing up a claim.
To offer claim assistance service, trust me in Term plan is also difficult for both us and the agents, this is simply because of the reason that Term Plans are long term in nature and post 10 years even we as an intermediary may or may not be present, leave alone the insurance agent.
Buying a term plan is beneficial online as you transact directly with the insurer, the benefit of that is, that you fill up the proposal form yourself, which the insurer actually wants and not just a signed empty proposal form which an agent would fill in basis his wit to reduce the chances of medicals, which as per us should never be the case.
On the amount of insurance you need to purchase, it should about 10 times of your annual income + any liabilities. E.g: if my annual income is say Rs. 8 Lakhs per annum plus i have a home loan of say around Rs. 30 Lacs. Then i should take a term cover of Rs. 1.1 Cr.
To go with policybazaar.com to buy your Bharti Axa Term Plan or not is your personal call as the same plan is also available directly through their site too, with almost no difference in premiums. We are a vertical search engine and our job is to show you the true picture in terms of premiums and returns. If you buy through us we would be most glad to have helped you.
Lastly, Post your purchase online, you do see a little slack in information processing, but please be aware that your work is happening and all policies bought online do get issued within 2 to 3 working weeks.
Hope have been able to resolve your query. Please do feel free to write back.
Policy bazaar people suggested me to buy bhartiaxa, and I found it to be suitable for me and hence paid premium online. Also gave application no to policy bazaar people. This happened on sept 16th. Bharti axa promptly sent medical examiner home. I got to know that their health assurance team hs approved my medical report. After that no news. I wrote to them, I called them up, all I get is a reply, ‘your policy will be processed with highest priority. ‘ they don’t give a date by which I will receive my policy. Meanwhile people from policy bazaar who helped me initially are not in the scene. Someone else from policybazaar called me up last week to check if received document..they said they would follow up.
I tried complaining to Hyderabad insurance ombudsman and got to know ombudsman is retired and it will take 3-4 months before new one takes seat! It seems email is not enough, one needs to send hard copy as complaint! Wow..
I withdrew my hdfc click2protect policy, and I am yet to receive money back. Just received a system generated SMS saying my policy is withdrawn..
I really don’t understand any of it. I give up. I might stick to LIC.