Top myths about buying Life Insurance online

The world is progressing and the digital movement has seen a tremendous growth in the past decade. With the progress of internet the online platform has boomed. The online marketplace has completely transformed the way you shop. It allows you the facility of comparison, ease of transaction and the promise of lowest rates. Even life insurance policies are being sold online as more and more insurers are developing Over the Counter (OTC) insurance products which can be bought with a few clicks. Despite the popularity of online insurance plans, many still abstain from buying online. They believe in common myths about online life insurance which makes them hesitant to try out the online marketplace. Do you know the top myths about buying insurance online?

Here are some of them. Find out how many of these do you believe to be true –

  • Online medium doesn’t sell genuine plans

A most common myth which most of you have is that online insurance plans are not genuine.  This is wrong. Insurance companies sell their life insurance plans directly and also through authorised brokers and aggregators. As such, when you choose to buy a plan through a reputed online platform, you get a genuine plan.

  • I would be cheated into buying a plan

Buying a life insurance plan is your decision. Nobody forces you to buy a policy which you don’t want. You can compare different plans, find the one which you want, seek assistance and then buy the plan. The process is completely transparent and there is no scope of cheating.

  • Online mode is not secured

Another notion which people have is that the online medium is not secure. It possess a risk of cyber fraud. While the risk of cyber fraud and online theft is present in online transactions, if you choose reputed websites, security is ensured. Reputed online brokers and aggregators have encrypted payment gateways which provide a secured platform for online transactions. Thus, you don’t need to fear about online security when you transact online through these authorised websites.

  • I might end up with a wrong plan

Many of you might fear the purchase of a wrong plan due to a lack of knowledge about life insurance. This fear is also a myth. Online platforms have customer service representatives who are available to answer all your queries. When you are buying a plan you can find out your requirements through online calculators and assess the suitability of the plan. For any queries you can engage the service of customer representatives who help you buying the right plan. Even after all this facility if you feel that you have bought a wrong plan, there is a free-look cancellation feature in all policies. You can cancel the plan within 15 days and avail a premium refund. Simple, isn’t it?

Read more 3 ways you can be fooled while buying life insurance

  • Online purchases are difficult

Online transactions involve some simple steps and authentications for a safe and secured transaction. This leads people to believe that online purchases are difficult. Online plans have simple application process. You just have to fill an online proposal form, provide the necessary information and make online payments and the plan is bought. Was it difficult?

  • My claim might be rejected if I buy online

Insurance companies reject claims only if you make a claim for an uncovered event or if the claim is found to be false. Buying online doesn’t result in rejection of claims. If you have provided the required details correctly and truthfully and if the claim is genuine, your claim would be honoured whether it is bought online or not.

  • Sharing personal information is unsafe

With all the fear of leaking of personal information online, many believe that the online medium is unsafe in protecting your personal information. This is, again, a myth. Reputed and authorised websites protect your personal information when you buy an insurance plan from them. Whenever you buy insurance online, check whether the website is authorised by the Insurance Regulatory and Development Authority (IRDA). If it is, there is no danger of leakage of your personal information as the website would be secured.

  • Online is suitable only for the acknowledged few

Being unaware of the online mode of buying an insurance plan, many of you believe that online purchases are suitable for the acknowledged few. It is not so. You don’t need too much knowledge to buy an insurance plan online. The online platform informs you about the different plans, their suitability, benefit structure and associated cost. You can get the required information online before buying the plan. Thus, everyone, and not few, can buy online.

How many myths did you believe in?

The internet revolution is here to stay and if you want to adapt to the changing world, its time you become online savvy. Online insurance plans are simple, easy and also allow comparison before you buy. So, shop online and get the best life insurance plan for your needs.

Read more to find out the mistakes to avoid when buying life insurance

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How is the premium for health insurance calculated?

While many now understand the importance of a health insurance plan, they still don’t understand how the premium is calculated. They believe that the premium solely depends on the sum insured they choose and their age. They are, however, wrong. Health insurance premiums are affected by a lot of factors, the sum insured and age being two of them. Do you know how the premium for a health insurance plan calculated?

Here are some of the factors on which the premium for a health insurance plan depends –

  • Age

The first factor which affects your health insurance premium is your age. The higher the age the higher is the probability of health risks. The higher the probability of health risks the higher is the premium charged. So, the premium is directly proportional to your age

  • Existing health problems

Pre-existing conditions also affect your health insurance premium. If you are suffering from any ailment like diabetes, heart problems, increased blood pressure etc., chances are that the premium would be increased for the higher health risk which you have.

  • Sum insured

Needless to say that your sum insured has a direct bearing on the premium rate. The higher the coverage level you select the higher is the claim risk which the company is undertaking. The premium is, therefore, increased with respect to the higher sum insured level.

  • Tenure

Health insurance plans, though they are an annual contract, can be taken for a continuous period of two or three years. In that case, you pay the aggregate premium at once. When you do so, the insurance company is assured of your continued coverage for the chosen duration. As such, the company offers you a premium discount. So, if you choose a higher tenure you get a lower annual premium rate.

  • Applicable discounts

There are different types of discounts available in a health insurance policy. As stated above, you get a discount for choosing a longer tenure. Furthermore, discounts are available if you cover two or more family members under the health plan, if you buy the policy online, if there has been no claim in any policy year or if you maintain your health. These discounts lower the premium outgo and affect the premium calculation

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  • Add-on benefits opted

Riders are available in a health insurance plan. They help in increasing the scope of coverage. Each rider comes at an additional cost. So, if you choose add-on riders the premium is increased. Some popular riders available in a health plan include critical illness rider, personal accident rider, hospital daily cash rider, etc.

  • Earlier claims

Making a claim in your health insurance policy also affects the premium rate. If you have a no claim premium discount making a claim nullifies the discount and the premium increases. Moreover, there might be claim-based premium loading in some health insurance plans. This loading increases the premium if a claim is made in the policy.

  • Medical history

Your medical history has an effect on your health insurance premium. If you have a health condition or have been treated for any complication in the past you present a higher health risk to the insurance company. As such the company loads your premiums because of the higher health risk you present.

  • Lifestyle habits

If you smoke or drink regularly your health deteriorates. A deteriorating health makes you more prone to medical complications. That is why your lifestyle habits influence your health insurance premium. Premiums are higher for smokers and heavy drinkers as compared to non-smokers or occasional drinkers.

  • Physical build

Your physical build determines your Body Mass Index (BMI) which is obtained by dividing your body weight with your height. A normal BMI indicates that you are healthy while a low or high BMI indicates a health risk. A high health risk means a higher premium. That is why your height and body weight affect the premium rate. They help the company to calculate your BMI which determines your health risk helps in calculating the premium rate.

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Read more how to save money on health insurance

So the next time you wonder how the premium of your health insurance plan is calculated, remember these points. You would understand how the premium is calculated.

Read more 10 things to keep in mind before buying health insurance

Term life plan or money back plan which one to buy?

Life insurance plans come in many variants. You can buy a plan which replaces the lost income in case of death of the bread-winner or a plan which specifically plans for your child’s future. There are plans which are designed for retirement funding while others help you enjoy capital market returns. Every life insurance plan has a different benefit structure and fulfils different needs. However, most often than not, you get confused between the different life insurance plans. You believe that they are similar to each other. Take the instance of a term plan and a money back plan. You believe that both these plans are similar to each other. Are they?

No they are not. Term insurance is different from money-back plans. Let’s explore how –

Term insurance plans

Term insurance plans, generally, cover your death risk. In case of death of the insured during the chosen tenure, the sum assured is paid. The USP of term plans is their premium. Since only the death risk is covered the premiums are very low. As such, term plans allow you to take higher coverage without pinching your pockets. Some of the salient features of the plan are as follows –

  • The maximum coverage tenure ranges from 25 to 35 years ensuring you get longer coverage
  • The plan pays the death benefit only. There are some plans, called return of premium plans, which refund the premium paid on maturity
  • Monthly pay-outs might also be paid under some plans in case of death benefit
  • In some plans there are also inbuilt rider benefits which enhance the scope of coverage. You might get accidental death benefit rider, terminal illness rider or critical illness rider under the plan.


Mr. A buys a term plan for a term of 30 years and the sum assured of Rs.50 lakhs. If he dies during the term of 30 years his family would get Rs.50 lakhs as the death benefit.

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Money back plans

Money back plans are saving-oriented plans which pay specified benefits at regular intervals. You choose the tenure and the money back benefits are paid at pre-determined intervals. In case of death you get a lump sum pay-out while in case of maturity the remaining part of the sum assured is paid. The features of money-back plans are as follows –

  • The term of the plan might go up to 25 or 30 years
  • Money back benefits, called survival benefits, are calculated as a percentage of the sum assured you have chosen
  • The interval at which the benefits would be paid and the amount of each benefit are pre-determined
  • Money-back plans might also be issued as participating plans which earn bonus
  • Money back benefits are paid only if the insured is alive at the pay-out interval
  • The death benefit pays the entire sum assured. The sum assured is not reduced for the money back benefits already paid


Mr. B buys a money-back plan for a term of 20 years and a sum assured of Rs.5 lakhs. The plan pays money-back benefits after every 5 years @ 20% of the sum assured.

Also check out our video below to understand money back plan in detail

B would get Rs.1 lakh at the end of every 5 years. On maturity the remaining Rs.2 lakhs is paid and the plan is terminated. In case B dies during the 16th year, the sum assured of Rs.5 lakhs is paid irrespective of the money back benefits already paid in the 5th, 10th and 15th policy years.

Comparative analysis of term v/s money back

Which one to buy

Both term and money back plans are different from each other. They are not substitutable. While term insurance is absolutely necessary for creating financial security for your family, a money back plan helps you in creating wealth for future goals. You cannot forego a term plan. You can buy a money-back if you want to create savings. So, understand the plans and then buy depending on your requirement.

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