September 19, 2014

Online Term Insurance in India-Beware before buying !!!

Whatever I am sharing in this post will be of what I had experienced while buying an online term plan for myself. I decided to buy additional life insurance based on my further insurance need.

Online Term Insurance

So what is misselling? Investopedia defines misselling as “The ethically questionable practice of a salesperson misrepresenting or misleading an investor about the characteristics of a product or service. In an effort to make a sale to a potential customer, a financial product salesperson could leave out certain information or describe a financial product as something the investor urgently needs, even though sound financial judgment would come to the opposite conclusion.” However, in case of my experience there was no salesperson involved, as I was planning to buy it online. So how I can judge that someone is misselling me?

As I said earlier to fill the gap of my life insurance need, I applied for XYZ’s online term plan. Process was smooth as I applied online and paid the necessary premium. I got a call from XYZ support team to undergo a medical test. Accordingly, I visited the test centre along with necessary documents and finished the test. After few hours of testing, I got a call from that medical test centre stating that all results were fine. Still, they need to get the signature of Cardiologist about my TMT (Treadmill Test). I felt happy because of all good results, which automatically claim that I am HEALTHY. I again received one more call on same day afternoon from the same testing centre. This time they said that I had some minor problems in heart, so what to do? I counter questioned them “how the result has now been, with minor issues in heart?” They replied that Cardiologist found some issues and he was about to write his report. I said OK; let him write as his findings. After a few minutes, I again got a call from the same centre. However, this time they offered me something unethical. They said if necessary, they might replace the report of any healthy person with mine. This replacement will correct the issues mentioned by a Cardiologist in my original health report and XYZ insurance company will easily accept it without any loading. In addition, they promised me that they had such healthy person who was ready to undergo testing in my name. I just need to pay some extra money. If I paid around Rs.1, 000 to Rs.2, 000 then the results was as per XYZ underwriting requirement. If not paid, then the results were defective original health report with some health concerns mentioned by a Cardiologist.

So now if I rejected the testing centre offer, then I might face the premium loading by insurance company and, if accepted the offer then everything will be a smooth sail. However, I finally opted for a first one. Result as usual, expected from the XYZ insurance company. They loaded the premium to around 60% and reduced the sum assured of 40%. Therefore, for me they offered a lesser sum assured than what I proposed and higher premium of what I already paid. As the offer seems to be too costly, I rejected it and got the paid premium back to my account with deduction of medical test cost.

After this incident, I searched for next suitable insurance product for me. This time I searched through a site (which provides comparative results only after you provide your email id along with phone number). Finally, I bought insurance from another company called ABC. However, after a few days I received a call from a person who claimed that he represents the above said site. He asked me whether I bought the policy or not. I replied with positive. Then his interest raised manifold and asked me about policy details like sum assured and premium. Finally, he asked me the policy number.

I surprised why he need all these data. He said that if we provide all these details, then his company would help me in future relate to policy service like nominee change, address change, revival or during death claims. I inquired how they could help. He answered that they keep data with them and I am free to contact them whenever I have any problems with the insurance company. Actually, he was not concerned about providing service to me. However, the intention was different. It was to claim to the insurance company that I bought the policy only after comparing from their site. Therefore, in return insurance company will give commission to this site.

Now do you still feel ONLINE TERM INSURANCE products are agents free? There may not be the direct agent, but there are so many such hidden agents, who may fool you in one way or another. Therefore, I still feel that term insurance not fairly priced.

This above whole story explains that, apart from agents there are a few others who are ready to sell anything for the sake of money. Such few medical centres or doctors appointed by insurance companies are the biggest threat to the insurance industry. However, sadly no one noticed it. I know a few doctors appointed by insurance companies who provide medical test without even knowing the proposer or actually meeting proposer. Agents will provide all required data and doctors just fill the form and give it back to the agents. In some cases, few agents who do wonderful business have such doctors’ forms in their offices. These agents take a signature of the proposer on to be signed medical forms by doctors while taking the signature on the proposal form. They give the same to doctor and doctor in return will give the report claiming that all is well with life proposer.

Also, beware if such insurance comparison sites insist you buy any particular product. Because the first thing they are not covering all existing insurance company products. The second thing they may push you to buy a particular product with which they have tied up.

So in above case do I qualify for misselling? Yes, I qualify if I have not understood the risk involved in adjusting for immediate gains. The moral of my true story is that, take care of everything you do while buying online term insurance. Any negligence or thinking of benefiting in the short-term may cost your financial dependents in the end.

Image courtesy of [ Stuart Miles] at FreeDigitalPhotos.net

74 Comments

  1. Sir, my wife is self employed, but cannot produce necessary income proof if needed. Should I take term plan in her name ? I’m a 44 year old government employee. Now both we have separate term plans from aegon, but plan to shift to maxlife. Kindly advice.

    Reply
      • A lot of issues sir. Actually my first term plan is from them. When I planned to enhance my coverage, of course due to low premium I again preferred aegon. This time I took for my wife also. She is running a coaching centre. But from the very beginning matters were not very smooth. We both underwent medical and policy issued. My address and phone number were different in the policy soft copy.(of some other Ravikumar from Chennai). Initials of my wife’s name were different. To correct all these , I sent and sent a lot of emails. They said they corrected my wife’s initials in their records. But still I get SMSs and emails with wrong initials. But they didn’t correct my details. They demanded me to upload fresh ID copies to correct phone number etc. I refused. I still pay the premium every month without fail. But all messages go to other Ravikumar. Email ID is correct. My wife got a printed policy document. But I didn’t. When asked, they told me that, they need not give customer a printed copy according to latest IRDA guidelines. When I notified them that my wife got policy document, they totally refused such a thing. They said they have not sent any policy document since 2015. But these are not the reasons for my anger. When I called them in their official number, one officer ( I won’t name him) told me that I cannot ask about my wife’s policy. They refused to answer my queries. My wife should call them personally. I couldn’t understand why. All these are ‘a never heard case’ according to me from a private firm.

        Reply
        • Dear Ravikumar,
          It is so sad that you underwent so many bad experiences. Also, thanks for sharing your experience. Let others can look over this before jumping.

          Reply
          • Thank you sir for your kind words

            Reply
  2. Dear Sir,
    I am planning to buy a online term insurance plan for Sum Insured 1 crore, but I haven’t come across any person (online / offline) who could share experiences one has of claim settlement. Could you please guide if it is better to buy the term plan from the Govt Insurance Companies like LIC at higher cost or buy it from well known private companies like Max Life at a much lesser premium for the same Sum Insured. Also please let me know how much help is provided by the online aggregators (websites showing comparison of term plans from different companies) of these term plans if the term plan is purchased through them.
    Regards,
    SANKET

    Reply
    • Sanket-To me all insurers are equally good and bad. Online aggregators act like insurance agents. Hence, the decision must be YOUR’S but not their.

      Reply
  3. Dear Basavraj,I had bought a SBI term insurance which expiry was on 22 April 2015, then I bought new term insurance policy of HDFC click to protect plus on 13th May 2015,but I informed to SBI life insurance only on phone calls, didn’t send them email, will it creat any problems in future for claim?

    Reply
    • Nilesh-You no need to inform to SBI for your future insurance buying. Even from now onward whatever you buy is not matters to both SBI and HDFC. However whenever you buy insurance in future never forget to inform about your EXISTING insurance of SBI and HDFC to new insurer.

      Reply
  4. Hi,

    I am 24yr old with annual income Rs 10Lac. Planning to buy TERM PLAN worth Rs 1Cr for 40yr.
    Option :-
    1) HDFC click 2 protect plus Rs9439
    2) Max life Rs 7130
    Kindly suggest which one is good as I am planning to purchase without any extra rider.

    Also should I add rider over these term plan or should purchase a separate health insurance for critical illness from Religare insurance.

    Regards
    Abhishek

    Reply
    • Abhishek-To me both are good. You already decided to buy without rider then why asking? Go ahead without riders.

      Reply
  5. Hi dear sirs, I am planning to buy Lic specifically Lic policy for my husband 53 with good returns and premium max up to may 100000 / can u suggest me which plan should I go which will satisfy his needs , he smokes , occasionally drinks has BP and sugar

    Reply
    • Neela-May I know the meaning of GOOD RETURNS? Based on that I can recommend you the product.

      Reply
  6. Hi,
    Very nice article.
    I am a diabetic type 2 and thyroid. I am taking medicines and both of them are in control.
    1) Can you please advise am i eligible for term insurance.
    2) If yes, can you advise any insurance companies that provides insurance to the people who have illness.
    3) My wife is a housewife. Can i take term insurance for her. If yes, let me know the best policies for house wife.

    Reply
    • Chandrasekhar-I can’t say whether you are eligible for Company A or Company B. Because it is purely depends on company’s decision. However, first try to apply. Let us see the result. You wife not required any term insurance. Don’t buy it on her name.

      Reply
  7. i went for ULIP option of 65 lacs cover and med tests were done. the lab said all is ok. Than after a week i was told to have TMT. The TMT was done and i was told again the TMT report is normal at the lab itself, i had declared that i am a light smoker and moderate drinker. after a week i was told that i will get the policy but with with 84000 / year extra premium… i am not abe to understand as they are saying that its underwritten due to my lifestyle.. is this normal?

    Reply
    • Sukhet-I can’t say what went wrong to increase the premium. Because it purely depends on insurance company and the underwriter’s decision.

      Reply
  8. My father is 63 years and mother is 58 years old.
    want to get a family floater and super top up plans for both of them, taking total cover to around 10 lac.
    Shall i go for united india insurance or any better company is there.
    Please suggest.

    Reply
  9. Hi Basavaraj,

    Planning for HDFC Click 2 Protect Plus Term insurance(along with increasing monthly income) with S.A of 2 CR for 30 years term.
    1> How reliable is HDFC when considering long term (for a 30 years term) in case any claim settlement arises ?
    2> Will there be any hidden/claim charges or deductions during any claim settlement ?
    3> Would it better to take multiple Term insurances with lower amount which equals 2 CR in total or would a single plan be suitable ?
    4> Is the increasing monthly income going to benefit nominee considering my retirement age is at 60 years (if incase claim arises before that) ?
    5> Would this be currently best flexible product option in market for Term plan with low cost ?
    6> Finally will there be any prior medical tests for a non-smoker too ?

    Thanks.

    Reply
    • Anup- 1) Read my recent post “What if your Insurance Company goes bankrupt?“.
      2) No.
      3) Single plan.
      4) I suggest plain vanilla rather than such fancy products. See the cost and also the interest cost on the money they retain to pay you the claim benefit yearly.
      5) There are other cheaper products available in market. There is nothing called BEST. Because every individual has his own unique requirement.
      6) Whether you be smoker or non-smoker, they will conduct the medical test. This is best to go for medical test and buy it rather running away from tests.
      4)

      Reply
  10. Dear Sir,
    Kindly do not get me wrong.
    May I zero in for CIGNA TTK /STAR RED CARPET policy as the head office is in Chennai.We two are senior citizens(67years and 65 years) and type -2 diabetic and based at T.NAGAR Chennai.(You have suggested National Varishta but the claim amount is low-very sorry for not respecting your view).

    I am waiting for your valuable comment.

    krishnamoorthy

    Reply
    • Krishnamoorthy-There is nothing wrong in that and also no need to say so. I know that Varishta plan sum insured very low. Go ahead no issues 🙂

      Reply
  11. Is Insurance Company not obliged to give the details or basis of ordering additional premium and withdrawal of waiver of premium in view of TMT Findings to the proposer?

    Reply
    • Girish-It is purely insurers decision, because there is no such definite ruling.

      Reply
  12. Sir,
    How can one know whether a particular insurance company is engaged in post claim underwriting. I mean, if it takes a month or more to accept the proposal after medical tests, does it mean it has completed underwriting exercise?

    Reply
    • Amit-Either they have to reject it by saying the reason or accept it by issuing a policy. If both are not there then it is under process.

      Reply
      • Sir,
        Thanks. Which is a better online term plan option –
        2 cr and 19 years.
        amit

        Reply
  13. Hi
    I want to ask a few questions
    1. Do we have to collect hard copy of policy document after buying an online term plan just for confirmation & surety ? Do the insurance companies provide it ? Or buying the plan offline giving high premium is a better option ?
    2. If I declare as a smoker & death is due to smoking related disease then is there any problem at the time of claims ?
    3. The premium is constant for the term or it increases with time ?
    4. Normal plans or Return of Premium Plans ? Is it wise to give away a huge amount of money over the term period without any return if nothing happens ? BTW it is the single question which is keeping middle class people away from term insurance plans.
    5. As you are warning us about the different aspects of online term plans, is it really the best option to buy these ? If so, then how to proceed to avoid such problems (i.e. middlemen) & easily buy a term insurance in an ethical way ?

    Reply
    • Deepak- 1) Insurance companies send you the policy document in hardcopy format. So no need to worry. In this process ONLY BUYING is online. 2) No problem, because you already declared your habit. 3) The premium will be constant. 4) Better to stick to normal plan instead of return of premium. Because you check the difference between two plans then you notice it 🙂 5) It is right to buy at the earliest. Choose company, go to their portal and buy it.

      Reply
      • Thanks for the quick reply

        Reply
  14. I want to buy term insurance. which companyfeatures and benefits is best and claim settlement ratio

    Reply
  15. Sir,

    I want to buy a term insurance policy for my self and I am 44 Years old. Please l let me know that what should I keep in mind and what what precaution to take for buying on line Term policy and what adequate measures I have to take as its my First policy .

    Best Best Regards and hoping a early reply.

    Reply
    • Vinit-Nothing special care. You need to fill all details properly without hiding anything. Be sincere with all while applying for online term insurance.

      Reply
  16. Hi,
    Thank you very much for your informational help. I also need some financial advise from your end.
    My husband is going to buy a term insurance from TATA AIA life insurance.
    Age :- 35years
    SA :- 2Cr
    Tenure :- 40yrs
    They are giving us two options as below :-
    Option I :- 60,000PA – 10yrs
    &
    Option II :- 22,000PA – 40yrs

    Can you please revert me which will be suitable option?
    Waiting for your reply & Suggestion.

    Reply
      • It means both are same?

        Can you please refer me any other insurance co. or other option to go with. As per my yesterday’s survey TATA’s service is not good.

        Reply
        • Shital-If you provide me the exact name of a product then I can suggest you the difference. If you feel TATA is not good then in my view you can go with LIC (Online term plan), ICICI, HDFC or Max Life.

          Reply
          • He want to go for online or offline term insurance

            Reply
          • Dear Shital,

            As suggested by Mr. Tongatti, you may consider our online term plan?? ICICI Pru iCare II or also look at our other online term plan iProtect (Link: http://bit.ly/17uqPjV). Here are few points for your consideration:

            1) ICICI Prudential Life’s claim record: We are committed to honour all claims quickly and fairly. As per IRDA’s annual report for FY14, ICICI Prudential Life Insurance Company’s claims settlement ratio is one of the best in the industry at 94.1%

            2) With iProtect, you have the advantage of a lower premium if you do not consumer tobacco. With iCare II you have the advantage of no medical test if you are age is 50 years or less and you opt for a cover of up to Rs. 1 Crore. You also have the option of paying premiums monthly, half yearly or annually.

            If you need more details on either iProtect or iCare II, you can fill your details here http://bit.ly/iciciprulifetermplans and we will have one of our experts contact you to assist you with your queries.

            Please understand that we only offer suggestions based on your requirements, however choosing a policy most appropriate for you remains at your discretion.

            Regards,
            ICICI Prudential Life Insurance

            Reply
  17. sir
    Thank you very much for providing useful information.

    I want to take term plan online from hdfclife and lic 25 l each.

    my question is that at the time of claim settlement, is it necessary to claim the amount online or by
    visiting any of the branch.

    Reply
    • Rabi-Your nominees need to visit personally to submit documents.

      Reply
  18. my qts is sir is, does online policy attract scrutiny of death in any year of death of policy holder and were as offline policy attract only first 3 yrs of scrutiny if death takes place in first three years from the date of policy commenced.

    Reply
    • Nimesh-There is a equal scrutiny whether it is online or offline. It is only agents who creates such fear among buyers. So don’t heed.

      Reply
  19. hello

    sir is lic eterm plan is best in online term plan because of high claim ratio
    plz guide me
    is online term plans are equally trustworthy like offline.

    Reply
  20. Hi Basuvinesh
    I want to buy an online term insurance for my wife (30 years, currently working, but may opt for stay-at-home in next few years). Please advise on the general guideline to fix the sum assured for such cases.

    Thanks in advance
    Jaiganesh

    Reply
    • Jaiganesh-Ideal cover must be around 15-20 times of yearly income.

      Reply
      • Hello Sir
        I should have put my question in a different way. What should be the sum assured for nonworking women?

        In my case, I was just wondering – Since I am adequately covered and can withstand financial implications in case any mishap to my spouse, is it worth going for term insurance with potentially no monetary return at the end of the period. Or should we invest that amount in endowment schemes, MF etc .

        Reply
        • Jaignesh-If no one is financially dependent on your wife then no insurance is required whether it is endowment, ULIP or term. Stay away from insurance.

          Reply
  21. Dear Sir & Madam,
    This is Mahesh from Tamilnadu now i am working at Dubai.
    I am looking for for LIC Anmol Jeevan Policy
    please tell about it and premiums and retunes.

    With regards.
    P. Maheshwaran

    Reply
    • Maheshwaran-Why you are buying it offline where as LIC itself offering online term plan at cheaper rate?

      Reply
  22. der firneds i would like torequest you all pls dont buy the insurance online becasue in online underwritng will done at the time to claim . nad in off live ( thru agent ) underwritting done before issuing the policy , whihc is 100% better. because in the begining only you will come to know the reason whether it will be accpeted or not .
    second thing if you buy the polciy thru online pls give sufficient training to your wife so that in the event of the death she will able to complete the formalitis whihc is very difficult for her.
    so always buy the insurnace thru agent who will diffinetly help in making claim settlelemtn
    anil pai

    Reply
    • Anil-For your information please understand the business module of insurance. How can a insurance company issue the policy without analyzing the risk it is about to take? What about so many questionnaires attached while buying including medical? Please update your knowledge on the same and correct yourself. I agree with your second point. But even buying with agent also harmful. Because we don’t know in case of insured person’s death the agent who sold will still be in the same business or not, will contact the wife of deceased and help him/her or will be in touch with family for so long (as insurance are meant for long term).

      Reply
  23. Once I was filling form for Personal Accident Policy, but due to some reason my laptop got shutdown,
    immediately after 10 minutes a person called me and said i am adviser of that insurance co.,
    He told me that he will help to fill the online form, i said okay, First he was guiding me properly,
    then he started asking me all personal details like Mobile No. & Address & DOB etc. He told me that he can check simultaneously, After that at the time of payment he told me not to by net banking A/c & was forcing me to pay by Credit Or Debit Card, (Without Giving Any Proper Reason for that). then he stated asking my Debit Card No. again & again then I doubt that something is wrong. And i immediately cut off the phone. (And so Buying that Policy)

    Beware Of Phishing Or Duplicate Sites Also. (Duplicate Site means a same look like page or web site)

    Reply
    • Ravi-Thanks for sharing your experience 🙂 Hope others (including me) will benefit from your own experience.

      Reply
  24. Hi Basavraj,

    Its really sad to know such practices exist.
    You should inform the XYZ insurance company and tell them to blacklist the concerned diagonistic centre.

    Reply
    • Gopinath-It is not a story of any one such diagnostic center..for small sum assured policies also few doctors practices such things. So regulators must come forward.

      Reply
  25. I bought HDFC click to protech plus policy of 1 cr sum insured. Processing was done including medical test. After medical test a letter was sent by HDFC stating that tests certify that I am a tobacco user. However, i never touched tobacco in my life time. The premium was increased by 15,000 INR which is 63% up. What is your advise further on how to handle this.

    Reply
    • Rajesh-In that case you have right to defend. Ask them to conduct a test once again (I hope they agree but expenses will be borne by you). If still results shows the same then no option either to continue or opt for another insurer.

      Reply
  26. Basavarajji

    Since your post is above investor awareness, why not disclose XYZ? You have documentation to support your claim and sharing what happened as is.

    Reply
    • Shiva-It does not matter for me by disclosing the insurance company or not. My only intention is to spread awareness and I did so. Hence it does not matter which company is that XYZ.

      Reply
  27. how do you see LIC ONLINE TERM PLAN regarding your experience? pl reply

    Reply
    • Sandip-I don’t have any special views about this. If it suites you then by taking care of above few issues you can go ahead and buy it 🙂

      Reply
  28. Dear Basavraj,
    Is there anything unethical if a insurance company is paying to policy bazar? Since, as a customer we are not paying any extra cost for the same service therefore it seems like OK.

    Reply
    • Nitin-But my point is how the online term plans are priced. They came to exist by saying NO MIDDLEMEN. Also if the same costs transferred to customers then is it right or wrong? Also what guarantee these sites will provide that they will give such service for so long (usually term of such plans will be long term). How and on what bases of insurance rules they are claiming that they provide such service. Because they are neither agents nor represent a company.

      Reply
  29. The author is indicating about policybazar.com site who calls for the data.

    Reply
  30. Basavaraj ji,
    your article is good but it’s a common practice ,here there is lot of miss selling happening every day particularly in finance sector due to ignorance of financial product ,not only agent insurance company giving such type of miss selling training to agents to sell their products. i think there is no way to stop such types of miss selling even IRDA a taking good & tough steps to stop miss selling ,AND finally one most important thing i want to say that client also love miss selling B’coz if you give correct information of product they will not buy if you offer lucrative ( false ) benefit they will agree to buy product it’s in most cases .except few cases

    Reply
    • Rizwan-If selling done with client’s knowledge then we can’t say it as misselling. It is mis-buying. So you can’t do on that. But we can easily stop misselling by educating ourself.

      Reply
  31. Dear Basavraj,
    As you said that after declining XYZ policy you bought ABC policy.I want to know whether while filling ABC form did you mention that you had declined XYZ policy. Please clarify.

    Reply
    • Vijay-No I had not mentioned it. But it is not required. It is only required when any previous proposals declined by a same company.

      Reply

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