Term Insurance cheapest….
Here is a mail from a reader A….a. 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.
Sambaran
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.
Vijay
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.
Minal Debnath
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.
Minal Debnath
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….!
InvestmentKit
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/
Jayaraman V
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.
krish
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.
Sambaran
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.
MKJ
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!!
Prav
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.
Indian Thoughts
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.
shiva
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 ?
InvestmentKit
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.
santosh sood
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.
Nishanth
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.
Sachin
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!
Praveen
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..
C J Gopinath
Hdfc click2protect is 3.5% costlier if bought thru Agent.
Agent is paid 35% commission for first year only.
no renewal commissions.
Mudit
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.