If you compare the premium cost of online and offline term plans, there is huge price difference. In some case, you can get online term plan for about 1/5th of the premium that you need to pay for offline term plan from the same company. The biggest benefit of the term plan is that they offer good life cover at very less premiums. Again, the online term plans make the life even easier for the investor. Some investors think that since online term plans are cheap, they are not as good as offline term plans. In this post, we will discuss the reasons behind online term plans being cheap in India.
How cheap is Term plan ?
The exact premium in a term plan depends on the age and health condition of applicant. Again, the premium also differs from one insurance company to another. It means that all conditions remaining same (age, tenure etc), a person has to pay different amount as premium for different companies. On an average, a healthy individual of 28 years can get online term insurance of Rs 50 lakh for 30 years by paying annual premium of 4000-6000. This is much cheaper in comparison to the offline mode.
Why are the Online term plans cheaper ?
There are a number of reasons behind this including:
- There is no agent involved when you buy the term plan online. Thus, the commission of agent is discounted from the premium.
- Another reason is that the operating cost in case of an online application is quite less for the insurance company. The companies have started rewarding the customers in return by charging less premiums.
- Now the final cause is that the target customers of these plans are healthy and young individuals in the age group of 25-35. As a result, there is less risk involved for the insurance companies and they charge less premium.
In brief, we can say that the insurance companies are charging less premiums for online term plans because it is economical and safer for them too. There is no risk involved in buying the term plan online provided you have basic knowledge of suing the internet.