E-Term Plan: All You Need to Know

The insurance sector has embraced a ton of technological advancements, leading to the emergence of handy solutions like e-term plans. These plans represent a modern take on traditional term insurance, offering convenience and accessibility through digital platforms. Designed for the tech-savvy generation yet simple enough for anyone to understand, e-term plans have revolutionized the way we approach life insurance. This guide aims to explain what e-term plans are, their significance, and how they fit into the contemporary landscape of life insurance. 

What is an e-Term Plan?

An e-term plan is essentially a term insurance policy that is purchased and managed entirely online. It is a type of life insurance policy that provides coverage for a specified term or period. Here’s a detailed look at what e-term plans entail:

1. Digital Format: Unlike traditional term insurance policies, e-term plans are bought and serviced over the internet, eliminating the need for physical documentation or the involvement of agents.
2. Simplified Process: The process of buying an e-term plan is streamlined and user-friendly. Prospective policyholders can compare different plans, calculate premiums, and purchase the policy, all online.
3. Lower Premiums: Generally, e-term plans tend to be more cost-effective than traditional policies. The elimination of intermediaries and reduced operational costs contribute to lower premiums.
4. Flexibility and Customization: E-term plans often offer a high degree of flexibility in terms of policy tenure, coverage amount, and premium payment options. Many also allow customization with riders or additional benefits.
5. Transparency: The online nature of these plans ensures greater transparency. Policyholders have easy access to all policy details, terms, and conditions at their fingertips.
6. Convenient Claims Process: The claim process is typically straightforward and online, making it more convenient for the beneficiaries.

E-term plans are designed to cater to the needs of the modern, digital-savvy consumer, offering a hassle-free and transparent approach to securing term life insurance.

Types of e-Term Plans

E-term insurance plans come in various formats, each catering to different needs and preferences. Understanding the types of e-term plans available is crucial for selecting one that aligns with your financial goals and life circumstances. Here's an overview of the different types of e-term plans:

Level Term Insurance Plans

1. Fixed Sum Assured: The death benefit remains constant throughout the policy term.
2. Steady Premiums: Premiums typically remain the same for the duration of the policy.
3. Suitable For: Ideal for those seeking straightforward, consistent life coverage.

Decreasing Term Insurance Plans

1. Reducing Sum Assured: The death benefit decreases over time, usually aligned with the decreasing liability of the policyholder.
2. Lower Premiums: Generally, these plans have lower premiums compared to level term plans.
3. Suitable For: Best for individuals with decreasing liabilities, like a home loan.

Increasing Term Insurance Plans

1. Increasing Sum Assured: The death benefit increases at a predetermined rate during the policy term.
2. Growing Coverage: Helps keep up with inflation and increasing financial responsibilities.
3. Suitable For: Ideal for those expecting their financial liabilities and needs to grow over time.

Return of Premium (ROP) Term Insurance Plans

1. Premium Refund: If the policyholder survives the policy term, the premiums paid are returned.
2. Higher Premiums: These plans usually come with higher premiums than standard term plans.
3. Suitable For: Those looking for life cover along with savings component.

Convertible Term Insurance Plans

1. Conversion Feature: Allows policyholders to convert their term plan into a whole life or endowment plan in the future.
2. Flexibility: Offers flexibility to change the plan based on changing life goals.
3. Suitable For: Individuals who might want to switch to a different type of life insurance later.

Group Term Insurance Plans

1. Collective Coverage: Provides term insurance to a group under a single policy, often used by employers for their employees.
2. Uniform Premiums: Generally offers uniform premiums and coverage for all members of the group.
3. Suitable For: Employers or associations looking to offer insurance benefits to their members.

Each type of e-term plan offers unique benefits and features, catering to the diverse needs of policy buyers. It's important to assess your personal financial goals, life stage, and coverage needs before selecting the most suitable e-term plan.

What are the Features of an e-Term Plan?

E-term plans, the digital version of traditional term insurance, offer a host of features that make them an attractive choice for modern insurance buyers. Here are some key features of e-term plans:

1. Online Accessibility: E-term plans are primarily available online, making the process of comparing, purchasing, and managing policies more convenient and time-efficient.
2. Cost-Effectiveness: The absence of intermediaries often results in lower premiums compared to offline term insurance plans.
3. Flexibility in Tenure: Policyholders can choose the policy term that best suits their long-term financial planning, often ranging from 5 to 40 years.
4. High Sum Assured: E-term plans usually offer a high sum assured, which means policyholders can secure substantial life coverage.
5. Variety of Payment Options: Premiums can be paid monthly, quarterly, half-yearly, or yearly, offering flexibility in payment methods.
6. Add-On Riders: Policyholders can enhance their coverage with riders like critical illness, accidental death, disability riders, etc., at an additional cost.
7. Tax Benefits: Premiums paid towards e-term plans are eligible for tax deductions under Section 80C of the Income Tax Act.
8. Swift Claim Settlement: With digitization, the claim settlement process in e-term plans tends to be faster and more streamlined.
9. Minimal Paperwork: Being an online product, e-term plans involve minimal paperwork, simplifying the process of policy issuance.
10. Transparency: Online platforms provide detailed information about the policy, ensuring transparency in terms and conditions.

What are the e-Term Plan Eligibility Criteria?

The eligibility criteria for e-term plans vary between insurance providers but generally include the following:

1. Age Limit: Most e-term plans are available to individuals between the ages of 18 and 65 years.
2. Income: Some insurers may require a minimum annual income to be eligible for purchasing an e-term plan.
3. Medical History: Applicants might need to undergo medical tests or provide a health declaration, especially for higher sum assured values.
4. Residential Status: Citizens, as well as non-resident Indians (NRIs) and Persons of Indian Origin (PIOs), can usually apply for these plans, although terms might differ for NRIs and PIOs.
5. Occupation: Some high-risk occupations might affect eligibility or premium rates.
6. Policy Term: Applicants must choose a policy term that typically ends before or when they turn 75 to 80 years old.
7. Lifestyle Factors: Smoking status and other lifestyle choices can influence eligibility and premium rates.

Understanding these features and eligibility criteria can help potential policyholders make informed decisions when opting for an e-term plan. For more specific details, it's advisable to refer to the individual terms and conditions of the insurance provider.

How to Claim Against an e-Term Policy?

Filing a claim against an e-Term policy involves a systematic process. Understanding each step ensures that the claim is processed efficiently and the benefits are disbursed to the rightful beneficiaries without unnecessary delays. Here’s a step-by-step guide:

Step 1: Inform the Insurer

• Immediate Notification: As soon as the claim event occurs (typically the death of the policyholder), the insurer must be informed immediately. Most insurers have online portals, helpline numbers, or email addresses specifically for claim intimation.
• Provide Basic Information: The claimant should provide basic information like the policy number, the name of the insured, date of death, cause of death, and the claimant's relationship with the insured.

Step 2: Submit the Necessary Documents

• Documentation: The claimant is required to submit several documents, which typically include:

1. Claim form or claim intimation form.
2. Death certificate of the insured.
3. Policy document.
4. Identity proof of the beneficiary.
5. Any other documents as requested by the insurer, such as medical reports or post-mortem reports, if applicable.

• Online Submission: In the case of e-term plans, insurers may allow or require the submission of scanned copies of these documents online.

Step 3: Claim Processing

• Insurer’s Review: Once the claim is intimated, and all necessary documents are submitted, the insurer will review the claim. This process includes verifying the policy, the event of the claim, and the authenticity of the documents.
• Queries and Investigation: If required, the insurer may ask for additional information or clarification. In some cases, an investigation might be initiated, especially if the claim is made soon after the policy purchase or in case of a suspicious death.

Step 4: Claim Settlement

• Decision: After processing the claim, the insurer will make a decision – to approve or reject the claim.
• Disbursement: If the claim is approved, the settlement amount will be disbursed to the nominee or legal heir, as mentioned in the policy. The mode of payment is usually direct bank transfer.
• Timelines: As per regulatory requirements, insurers are mandated to settle or reject a claim within a specified period, generally 30 days from receiving all necessary documents.

Key Points to Remember

• Timely Communication: Delays in intimation or submission of documents can complicate the claim process.
• Accuracy of Information: Ensure all provided information and documents are accurate to avoid any discrepancies.
• Understanding Policy Terms: Being aware of the policy terms, including exclusions and clauses, can prevent surprises during the claim process.

Following these steps can significantly streamline the claim process against an e-term policy, ensuring that the benefits are received by the beneficiaries in a timely and hassle-free manner.

What are the Benefits of an e-Term Plan?

E-term plans have gained popularity due to their distinct advantages over traditional term insurance plans. Here are some key benefits of e-term plans, particularly focusing on flexibility, higher coverage, and tax benefits:

Flexibility

• Policy Customization: E-term plans offer the flexibility to choose the policy term, sum assured, and premium payment options that best suit your needs.
• Rider Options: They often come with a variety of add-on riders, such as critical illness, accidental death, or disability riders, providing additional protection.
• Convenient Policy Management: With online management, policyholders can easily access their policy details, pay premiums, and even modify their plan if necessary, all from the comfort of their home.

Higher Coverage

• Affordable High Sum Assured: Due to lower operational costs, e-term plans generally offer a higher sum assured at a more affordable premium compared to traditional policies.
• Suitable for Varied Needs: The option for a higher cover makes it suitable for individuals with significant financial responsibilities, providing ample security for their dependents.
• Catering to Younger Demographics: These plans are particularly attractive to a younger, digitally-savvy demographic who seek substantial life coverage at economical rates.

Tax Benefits

• Deductions on Premiums Paid: Premiums paid towards e-term insurance plans are eligible for tax deductions under Section 80C of the Income Tax Act, up to a limit of ₹1.5 lakh per annum.
• Tax-Free Death Benefit: Under Section 10(10D), the death benefit received by the nominee is generally tax-free, providing the family with the full sum assured without any tax deductions.
• Additional Benefits with Riders: If certain riders like critical illness riders are opted for, they may offer additional tax benefits under sections like 80D.

Additional Considerations

• Ease of Purchase: The process of purchasing e-term plans is typically straightforward, involving no physical documentation or visits to an agent or office.
• Transparency: Online platforms provide detailed information about the plan, including the terms and conditions, ensuring greater transparency.
• Prompt Service and Support: Most insurance providers offering e-term plans also provide efficient customer service and support online, enhancing the overall customer experience.

E-term plans stand out as a modern insurance solution that caters to the evolving needs of today’s insurance buyers, combining convenience, comprehensive coverage, and financial efficiency.

How to Buy an e-Term Plan?

Purchasing an e-term plan is a straightforward process, and you can even buy one easily at InsuranceDekho. Here's a step-by-step guide on how to buy an e-term plan:

1. Research and Compare: Start by researching different e-term plans available online by browsing InsuranceDekho. Compare them in terms of coverage, premiums, policy terms, claim settlement ratios of insurers, and customer reviews.
2. Choose the Right Plan: Select a plan that best suits your coverage needs, financial goals, and budget. Consider factors like the sum assured, policy tenure, and the inclusion of any additional riders.
3. Fill Out the Application Form: Visit the chosen insurer’s website and fill out the online application form. This will typically require personal, professional, and health-related information.
4. Submit Necessary Documents: Upload the required documents, which may include identity proof, address proof, income proof, and medical reports (if required).
5. Undergo a Medical Examination (If Applicable): Some e-term plans may require a medical examination, especially for higher coverage amounts. The insurer will guide you through this process.
6. Review Policy Details: Carefully review all the policy details and terms and conditions before proceeding. Ensure that all the information provided is accurate to avoid issues during the claim process.
7. Pay the Premium: Once the application is approved, you can pay the premium online using various payment modes like net banking, credit/debit card, or digital wallets.
8. Policy Issuance: After the premium payment, the insurer will issue the policy and send it to you via email.
9. Review the Free-Look Period: Most e-term plans come with a free-look period (usually 15 to 30 days), during which you can review the policy terms and decide to continue or return the policy.

Conclusion

E-term plans have revolutionized the way we approach life insurance, making it more accessible, affordable, and convenient. With the advantage of online accessibility, such plans cater to the needs of the modern, digitally inclined consumer, offering transparent, cost-effective, and flexible life insurance solutions. The process of buying an e-term plan is user-friendly and can be completed from the comfort of your home, providing a hassle-free experience. By carefully selecting the right plan and understanding its terms and conditions, policyholders can ensure financial security for their loved ones in a simple and efficient manner.

Need help buying the right insurance plan? Get in touch with a relationship manager at InsuranceDekho for all your needs.

+91-7551196989 | support@insurancedekho.com | 

FAQs

Q. What is an e-Term Plan?

A. An e-Term Plan is a term life insurance policy that is purchased and managed entirely online. It provides life coverage for a specified term.

Q. How does an e-Term Plan differ from traditional term insurance?

A. An e-Term Plan differs in its digital format, often offering lower premiums, online management, and a straightforward buying process compared to traditional term insurance.

Q. What are the key benefits of an e-Term Plan?

A. Key benefits include lower premiums, flexibility in terms of coverage and payment options, online convenience, and potential tax benefits.

Q. Can I buy an e-Term Plan if I am not tech-savvy?

A. Yes, e-Term Plans are designed to be user-friendly, and most insurers provide customer support to assist with the online purchase process.

Q. Are medical tests required for purchasing an e-Term Plan?

A. Medical tests may be required based on the policy amount, the applicant's age, health declaration, and the insurer's policy.

Q. What documents are needed to buy an e-Term Plan?

A. Commonly required documents include identity proof, address proof, income proof, and sometimes medical reports.

Q. How do I choose the right e-Term Plan?

A. Choose based on factors like coverage amount, premium affordability, policy tenure, insurer’s reputation, and claim settlement ratio.

Q. What happens if I miss paying the premium for my e-Term Plan?

A. Missing a premium payment can lead to a grace period, after which the policy may lapse. It's important to adhere to payment schedules.

Q. Can NRIs buy e-Term Plans?

A. Yes, many insurers offer e-Term Plans to NRIs, subject to certain conditions related to their country of residence and income proof.

Q. Is the death benefit from an e-Term Plan taxable?

A. The death benefit from an e-Term Plan is generally tax-free under Section 10(10D) of the Income Tax Act, subject to certain conditions.