Life Insurance corporation of India (LIC) finally plans to release their first online term product. While this might look surprising for a company which banks heavily on its strong agent’s network, it would also seem logical as the other companies (like ICICI and Kotak) which offers pure online term product are about 50-60% cheaper than LIC. To keep up with the competition, LIC believes that they must join the expanding online insurance market. LIC is already the largest and the most trusted life insurer in India. If the online arm is added to its ambit they could reach even higher scales.
Recent reports say that an online term plan is sold every 18 minutes in India and is currently delivering a per day business worth of INR50 crore. In the past six months the seven life insurers offering such online policies have sold almost 15,000 policies with a combined insurance cover of about INR 9100 crore. The reason for the growing popularity of the online insurance plans can be ascribed to the growing internet penetration, more tech savvy population and finally the ease and cheap way of purchasing an insurance (online policies take only about 15-20 mins and is about 50-60% cheaper). However we should not expect a drastic reduction in the charges. Sources say that the rates would be cheaper by 15-20% for now. The other possible reason for these high charges might be that LIC is still using the mortality tables of 1994-95. The advancement in modern healthcare has changed people's lifestyle and life expectancy severely in these 15 years. As policy premiums are directly related to life expectancy the premium rates of LIC currently seem over-valued
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