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e-Term Insurance Plan

TeamAckoJun 13, 2024

Term Insurance Plans are popular for multiple reasons, such as providing pure life insurance coverage and being the most affordable kind of plan. They can be purchased in blocks of 10, 20, or 30 years and can be renewed or switched to a Whole Life Insurance policy later on. Nowadays, a new type of Term Insurance known as an e-Term Plan is available. It provides all the features of a premium non-participating term assurance policy. This article aims to explain what e-Term Plans are, how they work, and whether they are the right choice for you and your family.

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What is an e-Term Plan? 

An e-Term Plan is similar to a regular Term plan. It is a "non-participating policy", which means that it is a pure coverage plan. You will not get any profits or dividends from this insurance plan. When you purchase an e-Term Plan, your family will get a death benefit in case of your sudden demise. You can only buy e-Term Plans online. You cannot buy e-Term Plans from offline intermediaries such as insurance brokers or insurance agents. This is one of the unique features of this insurance policy and makes it a great choice for citizens in digital India.

6 Types of e-Term Plans

An e-Term Plan bases sum assured payouts on your lifestyle habits. Generally, your e-Term Plan will make the sum assured payments based on whether you smoke or not.

Level Term Insurance Plans

The sum assured remains the same throughout the policy term. The nominee receives the sum assured as a death benefit. This type of insurance is highly recommended for individuals seeking a straightforward and reliable insurance option that provides beneficiaries with a predictable financial safety net.

Decreasing Term Insurance Plans

The sum assured decreases over time, usually in line with a specific liability like a loan or mortgage. This type of plan prevents over-insurance as debts or mortgages decrease over time.

Increasing Term Insurance Plans

The sum assured increases over time to keep up with inflation. This plan is particularly suitable for those expecting their financial responsibilities to increase. The gradual increase in coverage helps ensure that the policy’s value remains sufficient to cover the rising costs of living and future financial needs.

Return of Premium (ROP) Term Insurance Plans

In case the policyholder survives the policy period, the premiums paid are refunded in Return of Premium (ROP) Term Insurance Plans. This type of plan is more costly but offers a savings element, appealing to those who seek both life protection and a way to recover their investment if they live beyond the policy term.

Convertible Term Insurance Plans

The policy can be converted into a permanent life insurance plan without the need for a medical exam. This flexibility is ideal for individuals whose health may change, who anticipate a future need for permanent insurance, or who might prefer the affordability of term insurance with an option to upgrade as their life circumstances evolve.

Group Term Insurance Plans

Employers purchase these plans for their employees. The premium is shared by the employer and employee, and the sum assured is usually a multiple of the employee's annual salary. This collective approach benefits employees by providing them life insurance coverage as an employment benefit at a reduced cost. It also benefits employers by enhancing the overall benefits package offered to attract and retain talent.

What are the features of an e-Term Plan? 

Since you can buy e-Term Plans online, you can purchase them anytime and anywhere! E-Term Plans are growing in popularity because they offer a flexible online plan to secure your family's financial future. Here are the detailed benefits of buying an e-Term Plan.

  • Low premiums: e-Term plans have lower premiums than traditional term insurance plans as no intermediaries are involved in the sales process, which reduces administrative costs.

  • Convenience: e-Term plans can be purchased online from the comfort of your home or office. This saves time and effort and eliminates the need for physical paperwork.

  • Easy comparison: There are several e-Term plans available online, and policyholders can easily compare the features, benefits, and premiums of different plans to choose the one that suits them the best.

  • Flexibility: Policyholders can choose the policy term and sum assured as per their financial goals and requirements.

  • Higher coverage: e-Term plans offer higher coverage for a lower premium, making them an affordable option for those seeking higher coverage.

  • Transparency: e-Term plans are transparent, and policyholders can access all the information about their policy, including the premiums paid, policy term, sum assured, and other details, online.

What are the e-Term Plan eligibility criteria? 

It's easy to apply for and buy an e-Term Plan. If you're an earning Indian citizen between 18 and 60 years old, you're automatically eligible to apply. You can still apply to buy an e-Term Plan if you're an NRI. Although residency rules vary by insurance companies, you're eligible as long as you live in one of the counties the insurance company specifies. 

Whether you're earning or getting passive income, you should have a steady cash flow to buy the e-Term Plan. You should be earning enough to be able to afford your premium payments. Also read: Term Insurance for NRI

How to claim against an e-Term policy?

If you pass away while your e-Term Plan is active, your beneficiaries can claim the death benefit. In order for your family to raise a death benefit claim, they will need to follow a set of rules which depend on individual insurance companies. In general, the following steps are requested from most insurance companies.

Step 1: Inform the insurer

The first step is to inform the insurer about the claim by calling or emailing their toll-free number. You will need to provide the policy number, the insured's name, and the date and cause of death.

Step 2: Submit the necessary documents

The insurer will require you to submit some documents to process the claim, such as the death certificate of the insured, a copy of the policy, identity proof of the nominee, and any other documents as specified by the insurer.

Step 3: Claim processing

Once the insurer receives the necessary documents, they will process the claim and verify the information provided. This may involve contacting the hospital or doctor for further information.

Step 4: Claim settlement

If the claim is approved, the insurer will settle the claim amount to the nominee's bank account. The claim amount will be equal to the sum assured of the policy.

Documents Required: e-Term Plan Claim Process

For a smooth and hassle-free claim process for an e-Term insurance plan, the following documents are typically required:

1. e-Term Plan Documents

  • Online Copy: Access and provide the digital version of your e-Term insurance policy. This is crucial as it contains all the policy details and terms under which the claim is made.

  • Hard Copy: A printed version of the e-Term policy document should also be submitted. Having both versions ensures no discrepancies in policy details and aids in verification.

2. Claim Form A

The nominee needs to fill out this form. It includes detailed questions about the insured individual, the circumstances of their death, and other relevant information required to process the claim. Accuracy and completeness in filling out this form are vital to ensure the claim process is completed on time.

3. Death Certificate

An official death certificate must be provided as it serves as conclusive proof of the insured's death. A competent authority issues this document, and it is necessary to validate the claim.

4. Nominee's Proof of Age (PoA)

Valid age proof of the nominee is required to ensure they meet any age-related criteria outlined in the policy for receiving the claim.

5. Evidence of Title (if no beneficiary is named)

In cases where no specific beneficiary is named in the e-Term Plan, the inheritors must provide legal proof of their entitlement to the deceased's estate. This includes legal documents establishing their relationship and rightful claim to the deceased's assets.

Additional Documents for Accidental Death:

  • Post-mortem Report: This is necessary to ascertain the cause of death in an accident. It provides detailed insights into the circumstances surrounding the death, which are crucial for claim processing.

  • First Information Report (FIR): If the death was due to an accident, an FIR needs to be submitted. This report filed with the police provides an official description of the accident, which is essential for verifying accidental death claims.

Tips for a Smooth Claim Process

  • Ensure Accuracy: Fill out all forms accurately and thoroughly to prevent potential delays or issues in the claim processing.

  • Keep Multiple Copies: It's wise to keep multiple copies of all documents submitted for your records and to prevent issues if originals are misplaced.

  • Follow-Up: Regular follow-ups with the insurance provider can help expedite the claim process and clarify any issues or additional documentation needed.

What are the benefits of an e-Term Plan?

Apart from being online and easy to access, an e-Term Plan offers you several useful benefits. Here are a few examples.

Flexibility

Policyholders can choose the policy term and sum assured as per their financial goals and requirements. This level of customisation ensures that the insurance protection aligns perfectly with personal financial strategies, allowing adjustments based on life changes such as marriage, homeownership, or the birth of a child. Talking about flexibility, ACKO Life Flexi Term Plan is a highly flexible term insurance plan that will change the way you look at term insurance.  This unique plan is known for its unmatched flexibility, as it allows you to customise:

Sum Assured

Policy Tenure

Payout Options 

Learn more ->

Higher coverage

e-Term plans offer higher coverage for a lower premium, making them an affordable option for those seeking life coverage. This is particularly beneficial for young adults and families looking for protection without breaking the bank.

Tax benefits

Under Sections 80C and 10(10D) of the Income Tax Act of 1961, policyholders can get tax benefits for the premiums and death payments they receive. This is valid under the old tax regime. These tax deductions significantly reduce the net cost of the insurance, enhancing the financial attractiveness of e-Term plans as a key component of a comprehensive financial plan.

Lower premiums

e-Term plans are often more affordable than traditional life insurance policies. This means you can get the coverage you need without spending much money, making it a cost-effective choice for many.

Online convenience

With e-Term plans, everything from application to policy management can be done online. This digital approach saves you time and hassle, allowing you to handle your insurance needs from the comfort of your home.

Beneficiary security

If something happens to you, these plans provide financial security to your loved ones. The sum assured can help support their living expenses, pay off debts, or fund education, ensuring they're financially responsible.

Premium refunds in ROP plans

Some e-term plans offer a Return of Premium (ROP) feature where all the premiums you paid are returned if you outlive the policy term. It's like getting life coverage for free if you don't need it.

Quick claims process

e-Term plans typically feature streamlined, efficient claims processes. This quick and simple procedure helps ensure your beneficiaries receive the financial support they need without unnecessary delays during a difficult time.

Convertibility options

Certain e-Term plans allow you to convert your term insurance into a whole life or permanent insurance policy later without additional health checks. This flexibility is great if your needs or circumstances change and you want longer-lasting coverage.

How to buy an e-Term Plan?

Unlike other Life Insurance Policies, you can apply for, and purchase, an e-Term Plan online. The steps to buy an e-Term Plan may differ according to individual insurance companies, but many adhere to the following steps.

  • Visit the insurance company's website: To start the process of getting your e-Term Plan, you'll need to visit your insurance company’s website. You can select how many years you want your e-Term Policy to cover. Then, you'll select your sum assured based on whether or not you smoke.

  • Submit personal details: Make sure to disclose all your information honestly. You may need to share details such as your job and work environment, gender, age, and health conditions. This step is crucial because if you submit incorrect details, your beneficiaries may not be able to claim on your policy.

  • Calculate your premiums: All life insurance policies are based on premium payments, calculated according to your health status, age, and other criteria. Generally, insurance companies will estimate your premium payments with factors including age, health status, gender, lifestyle habits, hobbies, sum assured you choose, and the number of years you want the policy for.

Purchase the e-Term Plan: E-Term Plans usually have annual premium payments. You can choose the annual payment option and will need to initiate the first transaction via an online payment mode.

Frequently Asked Question

Here are the answers to the given questions regarding the e-term insurance plans.

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Do I need a medical exam to buy an e-Term Plan?

You may need a medical exam according to the insurance company you're buying your e-Term Plan from.

What is an e-Term Plan grace period?

Usually, insurance companies offer a 30 day grace period when you can pay for missed premium payments. If you skip more than a certain number of payments, your policy lapses or terminates. 

Do e-Term Plans cover accidental death?

Yes, an e-Term Plan covers all deaths, including accidental deaths. However, death by suicide is not covered under the e-Term Plan.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.

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