HDFC enters online Term Insurance Model with Click2Protect

January 10, 2012   ·   0 Comments

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HDFC Life Click2Protect will offer the same customer a premium of only Rs5,000 for same coverage of 50 Lac which it is used to offer them earlier http://stockssavvy.comwith 12,000 Rs in offline mode. The customer will feel dejected but then be lured to give up the existing expensive policy and buy the new cheaper one. Unlike the Term Assurance plan which offers optional riders of accidental death and accidental disability, Click2Protect does not come with any riders.

The question is whether online sale without any agent make up for such a gigantic difference in the premium? It cannot justify the enormous variation; even though that’s the standard answer you will read or hear from the insurance company. Is there an assumption of online buyer living healthy lifestyle, having access to proper healthcare and hence will live longer? Time will tell if the assumptions stand true. The mortality experience of the product will tell if the premiums collected are enough or insurance company has hole in their pocket.

Aviva i-Life is the cheapest, beating the next competitor HDFC Life Click2Protect handsomely. Even though the current online term premium rates are good deal for customers, the competition is just getting started. Aegon Religare, which started it all with its innovative iTerm product, will soon cut its premium rates by 12% to 32%. Existing customers may be offered additional cover or rider to reimburse for the reduction in premium. The much-awaited online term plan this year will be from LIC.

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A new product ICICI Pru Life iCare tries to address the major hiccup with the online term insurance buying process. The medical tests which online term insurance products require for all (or higher age groups) has been done away with this innovative product. There were issues like premium hike after medical tests which used to catch customers by surprise. This one-of-a-kind product will have no medical tests and no surprises of premium hike. This is an online term plan in complete sense.

The policy has its share of cons as well. HDFC Life Click2Protect has maximum maturity age of 65 years which is a drawback, considering that many insurers today offer term plan with maximum maturity age of 75 years. The maximum policy term is 30 years. The minimum sum assured is Rs10 lakh and maximum sum assured is Rs10 crore. The product offers free-look period of 30 days from the date of receipt of the policy. The cancellation will entail refund of premium after deducting medical expenses (if applicable), pro-rata cost for the period under cover and stamp duty.

Recent entrants like DLF Pramerica U-Protect and Edelweiss Tokio Life Protection have premiums which are the lowest in offline term plan space. Their premium is Rs5,956 and Rs5,984 respectively for Rs. 50 lakh sum assured for a 27 year old non-smoker male based in Mumbai for policy term of 25 years. Both the products are offline as of now.

Here is a quick :

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Many insurers like LIC, HDFC Life, Bharti AXA Life, Tata AIG life are set to come out with term plans which may be pure online or combined with offline mode of distribution.

Term life insurance used to be almost three times expensive than personal accident cover offered by non-life insurers. Not anymore. It is now at par and if the trend of race to the bottom continues, term life premium can be unsustainable

You may also want to read about Too good to sustain online term Insurance Model

Source: Moneylife

How much Life insurance cover do you have? Whether you have any plans of getting a online term Insurance? Let us know.

Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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