Life insurance: Deepak Sood
I read that online term plans are hassle-free and usually offer large coverage at an economical price. How much more is the sum assured or the cover in online plans than the ones offered offline (for the same premium paid)?
Online term plans are sold directly to customers and have some advantages. An individual can apply for a policy and pay the premium for it online at any time/day. Since no intermediary is involved, the online policy purchase is comparatively faster. Further, the insurance company also saves some cost, the benefit of which is passed on to the customer in the form of lower premiums. The result being, the sum assured may be five-six per cent higher under an online term plan as compared to the ones offered through some intermediary. However, every purchase can’t be made online. Further, there are advantages such as more clear information about insurance plans, need analysis, expert advice and personalised services if the purchase is made through a reliable agent.
The markets are uncertain since few months. I had bought a unit-linked insurance plan three years ago. How do I check the returns it has earned? Also, if it has underperformed, does it make sense to withdraw? What is the lock-in period, so that I don't pay any penalty on withdrawing it?
Insurance companies declare net asset value on a daily basis for all the funds managed by them under Ulips. You can check these on the company’s website. This will help you in assessing the fund performance on a day-to-day basis. You can also request the insurer for a fund statement, which will provide you with the information of the investments made in the funds and current value of the fund. Some insurers also issue periodical newsletters (generally monthly) which might help assess the fund’s performance.
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It is not advisable to surrender the policy, particularly in volatile and underperforming market conditions. Rather use an option to switch the fund value of your policy from an existing fund to a more stable one like debt or money market funds till the market stabilises. As far as lock-in period is concerned, Ulip policies issued prior to September 1, 2010, have a lock-in of three years whereas those issued post September 1, 2010 have a lock-in period of five years. Further, always refer to the policy document before surrendering a policy as the penalty differs from product to product. No penalty is charged on policies issued after September 1, 2010 if it is surrendered after the policy has completed four years.
The writer is MD & CEO of Future Generali Life Insurance