Get More for Less | Value Research Buying a term insurance with higher sum assured sometimes works out to be cheaper. All you need is to avail premium rebate on high value policies online

Get More for Less

Buying a term insurance with higher sum assured sometimes works out to be cheaper. All you need is to avail premium rebate on high value policies online

The e-commerce boom has injected competition in the sales and marketing of almost every product, including insurance. Life insurance policies are now available online and they do away with interactions with unpleasant and aggressive agents. Insurance selling portals allow buyers to compare policies before purchase. This convenience has caught up fast, especially for the pure risk term life insurance plans. The easy comparability of these policies helps buyers and fuels competition, which has resulted in several insurers offering unique low-cost online term plans.

Buyers can further benefit from the online buying option by looking for the premium discounts available on high value policies. Typically, a high value policy is the one where sum assured is above Rs 50 lakh. In such policies, the insurer offers policyholders a premium rebate which in effect brings down the premiums paid for this cover.

Although one should only take as much life insurance cover as one requires, the one with high sum assured is cost-effective and provides higher coverage. While some may argue against such practices, their benefits far outweigh the costs.

We assessed two online term plans where it is beneficial to go with a higher sum assured.

In case of both Aviva i-Life and Aegon Religare iTerm plan, one actually benefits by going in for a higher coverage with premium savings, which effectively brings down costs. With Aviva i-Life, a Rs 50 lakh cover costs less as compared to a Rs 35 lakh cover. Likewise, premiums on a Rs 1 crore policy are less than that of a Rs 90 lakh policy. The outcome is similar when one considers Aegon Religare iTerm Plan. The premium outgo on a Rs 1 crore term plan is Rs 155 less than the premium on a Rs 95 lakh policy. Similar benefits can be seen on other sum assured policies too.

Aviva i-Life mentions premium discounts on high value policies, whereas Aegon does not. So, should one go for a high sum assured policy? Ideally, you should opt for a policy based on your need than just because it is available cheap. However, if you foresee insurance needs rising in the future, than buying a cover with higher sum assured makes sense. But pertinent to keep in mind is the fact that insurers issue policies after evaluating the risk carried by a life. If the insurance company feels that you have chosen a cover higher than necessary, it may well deny you the cover. Though nothing prevents you from exploring the option before you go for a term plan. After all, a rupee saved is a rupee earned.

Premiums based on the online premium calculators from the insurer's website.
The policies mentioned have been used for illustration only.

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