Buying Life Insurance Online: What You Must Disclose Before You Sign Up

Buying a life insurance policy online is quicker. A buyer can compare insurers, check policy terms and complete the proposal without visiting a branch or meeting an agent. But convenience does not reduce the responsibility attached to the proposal form.

The buyer has to ensure that every answer on health, income, occupation, smoking, alcohol consumption and existing insurance policies is correct. A missed detail may not matter while buying the policy, but can become important when a nominee files a claim.

Premium Is Not Decided Only By The Buying Route

Online policies are often seen as cheaper because there may be no physical intermediary involved. But the final premium is not determined by whether the policy was purchased directly or through an agent.

Age, health condition, occupation, lifestyle, policy term, and the amount of cover have a bigger bearing on the premium. A young non-smoker with no medical history may get a lower premium than an older buyer with health concerns, regardless of the purchase channel.

“Premium rates primarily depend on the customer's age, health, policy term, lifestyle, occupation and coverage rather than the channel of purchase. Buying an insurance plan from a licensed PoSP offers expert guidance to the customer,” says Sarita Joshi, head of life & health insurance, Probus.

For buyers who understand term plans, riders and policy exclusions, buying directly may be a straightforward option. But the cheapest policy is not always the most suitable one. The cover amount, tenure and payout option should match the family’s financial needs.

Proposal Form Details Can Decide A Claim

The proposal form is not a routine document. It records the information on which the insurer decides whether to issue the policy and at what premium.

Medical history must be disclosed fully, including past illnesses, treatment, hospitalisation or tests. Lifestyle habits such as smoking, tobacco use and alcohol consumption also need to be reported. Income, occupation and existing policies should not be left out.

“Any habits such as smoking, tobacco or alcohol consumption should also be informed. In addition, other important details such as occupation, income, existing policy (if any), etc must also be disclosed completely and accurately,” says head of life & health insurance, Probus.

An agent or licensed Point of Sales Person (PoSP) may be useful for first-time buyers, people with pre-existing illnesses or those with complex insurance needs. The buyer should still read the proposal form before submission and retain a copy of all documents shared with the insurer.

FAQs

Is buying life insurance online always cheaper than buying through an agent?

No. Premiums are mainly based on age, health, lifestyle, occupation, policy term and cover amount, not only on the route used to buy the policy.

What details should be disclosed while buying life insurance online?

Buyers should correctly disclose their medical history, smoking, tobacco or alcohol use, income, occupation and any existing life insurance policies.

When should a buyer consider taking help from an agent or PoSP?

First-time buyers, people with pre-existing illnesses, or those with complex insurance needs may benefit from guidance while choosing the policy and filling the proposal form.