Go online to buy a policy and save on premium !!!

Buying of policies online may prove to be a revolutionary change for Life Insurance industry, if it is proved to be successful. Obviously, it is a boon for customers!!!

Following is the article in Business Line (2nd dec), by Bridget Leena...

There may be many policy holders left ‘frustrated' after paying hefty commissions to agents who go missing after selling a policy. Now, customers can take heart. They can just go online and buy insurance at a lower premium saving on the agent's commissions. In a move that may change the dynamics of the insurance industry, the insurance regulator has permitted insurers to sell policies online at a lower premium. Mr R. Kannan, Chief Actuary, Insurance Regulatory and Development Authority, said, “We are satisfied with the well underwritten procedure undertaken by the insurance players and have ensured that companies will not go overboard.” The conditions for selling online policies are twofold, first – actuarial calculations should determine the premiums and, hence, there should not be undercutting among insurers, and the policies must be compliant with IRDA norms, he said. Earlier, the regulator did not permit insurers to sell policies through the Internet at a lower premium (compared with the rates in the market) because it did not want to discriminate between an urban consumer (with Internet access) and his rural counterpart. The distribution cost of selling a policy is far less on the Internet compared to an agent who charges a commission for his services. After various surveys and market research, IRDA has come to the conclusion that the information technology revolution has reached the villages and with a view to increasing insurance penetration in the country the earlier stand has been relaxed, said Mr Kannan. “My concern has been that when a claim arises from a policy being sold through the Internet it does not get rejected by the company. Therefore, we are monitoring and analysing the claims from this channel,” he said. Although insurance policies have been sold through the Internet earlier, now they are available at a cheaper premium. Currently this channel of distribution is not yet fully developed, with only few insurers selling one or two policies. Aegon Religare Life's iTerm plan and Bajaj Allianz's unit-linked iGain were launched recently while HDFC Standard Life is in the process of offering a policy online. The table gives an overview of premium of term insurance by various players. A strict comparison of premiums should not be made since in the case of other insurers, policies are sold through agents and have additional features. The Aegon Religare Life iTerm plan comes without riders and only available on the Internet and, therefore, the cheapest. For example, Gopi Kumar aged 35 can buy a term insurance for a sum insured of Rs 50 lakh for a 25-year tenure for a premium ranging from Rs 13,000 to Rs 20,000 through agents and for Rs 7,500 online.

How they compare...

Term Policy                                              Premium in Rs                                      

Aegon religare Life iTerm plan*                   7,500                            (available online)

ICICI Pru Life - Pure Protect                      13,850

HDFC Stnadard Life - Term                        14,504

LIC - Amulya Jeevan (plan 190)                 19,850

Birla SunLife Insurance                              17,451

Bajaj allianz Life                                       16,276

..rates are exclusive of taxes