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You can buy anything online these days. Can life insurance be far behind? You can buy a term life insurance policy or even a Ulip online these days.
This begs the question…Is an online Ulip a good buy?
Online Ulips are cheap and there is a reason for it. There are no expenses for the insurance agents and the distributors of the Ulips as their services are not required by the Insurer. You come online and make a purchase. This results in a saving in commissions for the Insurer and this benefit translates to a lower premium for you.
The bane of Ulips used to be the high premium allocation charges. This used to be as high as 30% of the premiums you paid before September 2010 as high commissions were paid to life insurance agents selling you Ulips.
Post September 2010 reforms the premium allocation charges reduced to 7-8% of the premiums you paid. This meant a huge reduction in the premiums you pay for the Ulips.
The online option of purchasing a Ulip goes one step further. It completely does away with the premium allocation charges. This savings is transferred to you through a cheaper premium if you avail an online Ulip.
Galloping stock markets:
The galloping stock markets mean a huge interest in Ulips. An equity Ulip invests in the stock markets and if the stocks markets are rising rapidly Ulips give good returns.
This means interest in the online Ulips increases.
The tax benefits of the Ulips:
The premiums you pay on a Ulip are tax deductible up to INR 1.5 Lakhs under Section 80 C of the income tax act. The maturity amount you get when the policy matures is tax free under Section 10 10(d).
The season of January to March is when you seek life insurance products which give you tax benefits. This is when you must purchase an online life insurance Ulip to save on your taxes.
The tech savvy generation:
If you reside in an urban area you would be tech savvy (use internet a lot) and also financially knowledgeably. You know what you are buying You make a better disclosure as they are no insurance agents involved.
You have to answer all the questions online yourself and this means you are more honest (a better disclosure).
There is no scope for the life insurance agent to advise you to misrepresent (present false data) to save on your premium.
There is no need of medical tests especially if you are below 50 and submit proof of good health.
All these make buying a Ulip online a good deal.
There is a point of worry …You need to be absolutely sure of the Ulip before you make a purchase. The Ulip has a lock in period of 5 years and if you pick the wrong online Ulip you will be stuck for this time period making it difficult to exit the policy.
You need to check all the features of the Ulip as well as the performance track record and see if the Ulip is in alignment with your long term goals.
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