In your interest.
Online Personal Finance Magazine
No beating about the bush.
Apollo Munich has launched Optima Restore, a mediclaim with innovative features of restoring sum insured during policy year and giving 50% no-claim-bonus increase in sum insured for couple of years. Will this optimal product restore faith in hapless mediclaim insured?
Apollo Munich Optima Restore takes care of couple of key customer needs. Customers fear exhausting the sum insured (SI) during the policy year and hoping there would not be any more hospitalisation during the remaining policy year, as there isn’t any more insurance until the new policy year. Optima Restore will give additional SI (equal to base SI) without additional premium or paper-work. The only caveat is that the additional SI can be used only for new illnesses. This is applicable for individual and family floater products which can be a boon to customers. E.g. Individual or family floater of Rs3 lakh SI can potentially give Rs6 lakh coverage in a year for the individual or family without additional premium (if Rs3 lakh is exhausted in the policy year), as long as the additional coverage is used for new illnesses.
The other concern customers have is that no-claim-bonus (NCB) usually gives only 5% additional SI subject to maximum of 25% in most mediclaim products. Apollo Munich is offering 50% increase in SI for NCB at no extra premium, subject to maximum of two years. This means if there are no claims in couple of years, your SI can double without any premium for additional SI. The only catch is that if there is claim, your SI drops down to the previous policy year, but you are guaranteed base SI. E.g. Individual or family floater of Rs3 lakh SI will increase to Rs4.5 lakh SI next year if there is no claim. If there is another year of no claims, the SI will increase to Rs6 lakh, but you will pay premium on only Rs3 lakh SI. If there is claim in year, the SI falls to Rs4.5 SI. If there is another year with claim, the SI goes down to Rs3 lakh, but it will not go below Rs3 lakh. If there are claim-free years again, there is potential to increase SI by 50% for couple of years.
The best feature is that the restore feature of SI and NCB multiplier work together. E.g. Individual or family floater of Rs3 lakh SI will increase to Rs6 lakh SI in a couple of years with no claim. If for some reason, Rs6 lakh SI is exhausted in the policy year, the product will give additional Rs3 lakh (base SI) coverage for new illnesses. It means you can be covered for Rs9 lakh during that policy year by paying premium of Rs3 lakh SI.
HDFC Life online term life insurance has premium rates 50% of its offline version, to make it competitive in the market. The online term life insurance market is heating up with more players entering the fray and existing ones planning to take the pricing further down. Is it a race to the bottom?
HDFC Life Click2Protect will beat its own term life insurance HDFC Life Term Assurance product by 50%. Imagine, a 27-year old existing HDFC Life Term Assurance customer shelling out annual premium of Rs11,294 for Rs50 lakh sum assured for policy term of 25 years. Today, HDFC Life Click2Protect will offer the same customer a premium of only Rs5,000 for same coverage. 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.
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.
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.
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 Rs50 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.
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