I have explained in my earlier post that all the insurance companies will be moving towards Online channel for selling their insurance products. Also I have explained that Term plans which were earlier untouchable products will be selling like hot cakes due to increased awareness and demand of this class of product. Kotak life insurance has launched low cost term insurance plan which can be bought online only at much lower cost, inline with what is being offered by Aegon Religare ITerm plan, ICICI Prudential IProtect Plan, Metlife Met protect Plan.
Reasons why these products are offered so cheap? Although it has already been discussed in my earlier post, I am elucidating it again for your reference.
Reasons why this policy is cheap
- Average life expectancy has increased in India and as per new actuaries data, mortality charges should decrease resulting in lower premium. LIC is following the mortality charges decade ago and has still not revised it. However the same is expected soon.
- Term insurance was a neglected market earlier and hence due to hi risk in limitation of law of averages insurance companies used to charge high premium. Now since insurance companies has seen demand in term insurance which is being opted by more people, in order to keep their product competitive they have to slash the premium.
- The medical test conducted in this type of policy is very stringent and this premium is only for healthy non smoking person unlike in other insurance products where there was not much premium difference in health and non healthy male, meaning healthy people used to subsidize the premium for non healthy people. To summarize you are getting discount for Sound Health and being a non smoker which is significantly reducing the risk of Life Insurance Companies..
- Online option results in reducing distribution costs which is being passed on to the customer.
- Since this product is available online only, it will be bought by educated class only, where mortality rates is much lower due to affordability of higher medical expenses which would further reduce the risk of Life insurance companies by reduction in claim ratio significantly. It would be not be wrong to say that this policy at the Lower Premium will be available only for Educated, Healthy, Niche class only.
To Conclude, you are being offered these premium rates for this Term Insurance as a Reward for being, healthy, aware, educated and non smoker. I will not comment anything about the services, but as far as policy terms is concerned, its same as being offered by other Insurance Companies, and there is no catch.
Kotak e-Preferred Term is a pure risk cover plan that provides you with a high level of protection at a very economical price. In the unfortunate event of your death during 1 the policy term, your beneficiary would receive the Sum Assured as a lump sum. You may also choose the Step Up Option to increase your life cover as and when certain important events take place in your life adding to your financial liabilities.
Unique offering by Kotak E Preferred Term plan
Life cover Step-Up option available at important stages of your life i.e. you can increase your sum assured at lifestages i.e. getting married, birth or legal adoption of child
No medical examination on exercising the Step-Up option.
Step Down Option. In the event of real need, you can step down to a lower amount of cover subject to the minimum amount of cover available in this plan. On stepping down, your premium will be recalculated based on your revised sum assured.
Plan Conversion You may convert your Kotak e-Preferred Term to any other plan offered by Kotak Life Insurance (except for another term plan). This benefit is available at any time during the term of the policy provided there are at least 5 years before cover ceases. The premiums applicable in the new plan would apply. No medicalexamination will be required.
How does this plan work?
STEP 1:Decide the amount of cover (Sum Assured) you require
STEP 2:Decide the term for which you want to be covered
STEP 3:Decide if you want to choose the Step Up Option
STEP4: Your premium will be calculated basis the above steps
Logon to http://insurance.kotak.com, enter the above details and get your policy
Protection
Low Cost Insurance
Kotak e-Preferred Term offers the benefit of high life cover at very economical prices. If you are a woman or if you do not consume tobacco, you will be eligible for the same amount of Sum Assured at a lower premium.
Key Benefits Offered By The Plan
Step Up Option
You may avail of this option at the time of purchase of the policy. It guarantees you additional insurance cover at certain important stages in your life in a costeffective and hassle free manner. You can increase your Sum Assured without having to undergo any further medical examination.
The Step-Up Option is available to you at a nominal fee depending upon the policy term chosen by you. This fee will be charged till the age of 45 or the end of
policy term, whichever is earlier.
Events in which Step Up option can be exercised
1.Marriage: 50% of original Sum Assured
2.Purchase of house in India after commencement of the policy (subject to maximum of loan amount): 50% of original Sum Assured
3.Birth or legal adoption of a child: 25% of original Sum Assured
4.On the 1st, 3rd and 5th policy anniversary: 25% of original Sum Assured
This option can be exercised at one or more of the events listed above, provided your total revised maximum Increase in Sum Assured is not more than 300%. The increase in Sum Assured depends upon the event basis which you want to exercise this option. An additional premium will be charged for the increase in Sum Assured.
Tax BenefitsYou can avail of tax benefits under Section 80C and Section 10 (10D) of the Income Tax Act, 1961. Tax benefits are subject to change in the tax laws. You are advised to consult your tax advisor for details.
Kotak e-Term / e-Preferred Term is a non-participating plan with no maturity benefits payable.
Before you purchase this plan, you must make sure that the following criteria are fulfilled:
Entry Age (as on last birthday) Min: 18 years, Max: 65 years
Policy Term Min: 5 years, Max: 30 years
Maturity Age Max: 70 years
Premium Min. Rs.1,800 p.a., Max. Based on Sum Assured
Premium Payment Mode*Yearly, Half Yearly, Quarterly, Monthly
*Premium rates for Half-Yearly, Quarterly and Monthly modes are 51%, 26% and 8.5% of Annual Premium rates respectively
SumAssured Min. Rs.25,00,000, Max. Subject to underwriting
Given below are indicative premiums for a few combinations of entry ages & policy terms for a Sum Assured of Rs.30 lakhs.
Age | 10 years Term | 15 years Term | 20 years Term | 25 years Term |
25 | 3100 | 3105 | 3120 | 3140 |
30 | 3195 | 3215 | 3355 | 3640 |
35 | 3680 | 3835 | 4245 | 4800 |
40 | 4895 | 5360 | 6075 | 7140 |
Premiums calculated are annual premiums excluding service tax, for a healthy individual male (non-tobacco
user). The premiums are further subject to service tax and any other charges levied by the Government of India
