Our online survey shows that Moneylife readers are cautious; and consider term life insurance a good product

Our survey on term life insurance shows that Moneylife readers are surprisingly prudent; they go in for term life insurance in large numbers. This finding contradicts the common assumption that customers don’t know about term plans; they don’t ask for them, since agents don’t offer them; and insurance companies are not keen to sell them. The Moneylife online survey received responses from 1,455 readers, the largest so far. Of these, 67% were buyers of term life insurance and a high 80% felt that term life is the best insurance product. As many as 44% of the respondents believe that insurance is an investment and they would prefer to have the premiums which they have paid returned to them, if they are alive at the end of the policy.

While our readers seem to be a savvy bunch, the fact is that insurance agents normally don’t push term policies; 56% of the respondents have not come across an agent who is actively selling term life policies.

When it came to choosing a life insurer, Life Insurance Corporation of India (LIC) stands heads and shoulders above the rest. As many as 44% of the respondents felt that LIC is preferable to private insurance companies—even if the former is more expensive for term life policies.

Almost half (48%) of the respondents are enticed into buying the lowest premium term life insurance which is not the right approach. A high 65% of the respondents are concerned about the financial status of the newer insurance companies; this confirms their overwhelming faith in LIC.

The online channel to purchase term life is yet to catch up in a big way. Only 26% of the respondents were willing to consider it as an option. Barely 28% of the respondents were willing to recommend it to relatives and friends.

There were only 63 cases where a respondent knew someone personally, who had filed a death benefit claim on a term life policy which had originally been purchased online. The claim settlement was favourable in 35 of these cases.

Online buyers: Of the 1,455 respondents, as many as 20% (over 300) had purchased insurance policies through an online channel. On the issue of whether the online term life buying process was smooth, the responses were split down the middle. Fifty per cent felt it was smooth; an equal number found the process difficult.

Readers must note that a medical check-up is required even for online purchase, depending on the customer profile; 177 respondents out of 323 had to go for a medical check-up; 93 respondents out of 320 said that the policy premium increased at the time of policy issuance in an online purchase of term life insurance policy. Only 90 respondents out of 332 have purchased riders on the policies that they purchased online—indicating riders are not the key deciding factors for savvy online buyers.