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Oct 14 2011 5:10PM
Online insurance plans: Why they are a compelling option

From the time he started working, Mukul Kansal, 41, has looked at life insurance policies as money-saving tools. But 20 minutes in August changed his perspective forever. That is roughly the time the Gurgaon-based engineer took to buy an online term insurance of Rs 1 crore. The i-Life online term plan from Aviva Life Insurance costs Rs 15,275 a year and will cover this father of two for 20 years. "This is really the best way to buy life insurance," he gushes. "I already have 11 life insurance policies, but the cover is only Rs 20 lakh, while I pay a premium of Rs 2.10 lakh a year." Online term plans have become a huge hit with insurance buyers in the past two years. Every 18 minutes, an online term plan is bought in the country. In the past six months, the seven life insurance companies that offer such term plans have issued more than 14,500 policies with a combined cover of roughly Rs 9,100 crore. This is almost equal to the total cover offered by all new policies sold by the five latest life insurance companies (Star Union Dai-ichi, Shriram Life, IndiaFirst, DLF Pramerica and Sahara Life) in 2010-11. The large cover offered by online plans is good news for an underinsured country like India. In a recent survey of middle-class people in metros by ING Life India, 85% of the respondents said that they felt a greater need to protect their lifestyle. Yet, the average life insurance policy issued in 2010-11 offered a cover of Rs 1.93 lakh. In contrast, the online plans sold since April this year offer an average cover of Rs 62.5 lakh. Aviva Life Insurance, which launched its i-Life online term plan in May this year, has sold 4,857 policies, with an average cover of Rs 75 lakh. Aegon Religare Life Insurance, the company that pioneered the online term plans in November 2009, has already sold 17,227 policies, with an average cover of Rs 60 lakh. This adds up to a combined cover of a whopping Rs 10,336 crore sold by one company through the online channel. The absence of the agent in the entire process pushes the buyer to look at life insurance from a different perspective. It is no longer seen as an investment, but as a risk mitigation tool. It is no longer considered a tax-saving tool, but a way to cover risk. "The customer makes a well-informed, independent decision," says Elizabeth Venkataraman, senior vice-president, Kotak Mahindra Old Mutual Life Insurance. Easy and cheap The biggest draw of the online channel is the ease and cost advantage it offers to the buyer. The entire process takes only 15-20 minutes. Just key in the personal details, make the payment and your life cover begins. Of course, this is subject to your documents being in order and you being in good health.
 
 
 
 
 
 
 
 
 
     
 
     
 
 
 
 
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