How is Phone Pe’s Term Life Insurance Plan? A Review
Digital wallet platform, PhonePe launched a term life insurance plan in association with ICICI Prudential Life Insurance, a couple of days back. This product offers instant no-paperwork-no-medical-test purchase of term life cover exclusively to members registered on the mobile app.
Is the product any good, and should you buy it? Here's some dope for you to make a decision.
What's on offer?
As we said earlier, this product offers you the convenience of buying a term insurance plan online and instantly, without any paperwork or medical tests. It is probably the fastest way to get term insurance. All you have to do is answer a few quick questions, provide a declaration of good health, make the payment - and bam! The policy will be delivered to you immediately.
Plans are offered for individuals between the ages of 18 - 50 years and covers from INR 1 Lakh to INR 20 Lakh.
How much is the premium? Is it cheap?
These plans are available for a flat premium as per the following table for the entire age group of 18-50 years.
The pricing is very similar to regular individual plans where a 30-year old can get a non-group plan of INR 25 Lakh for around INR 3500 to INR 4000. So, there is no significant cost advantage in this plan over regular plans available otherwise.
At the same time, you must note that since the premiums are flat across age groups (18-50), if you are younger than 30, your premium will be higher than regular plans - similarly if you are older than 35, then the premium can be to your advantage
Who is eligible?
Not everyone is eligible to buy this policy. Here are some requirements:
- You need to be in the age bracket of 18 - 50 years.
- You should have an annual income of Rs. 2 Lakh per annum or more to get cover of Rs. 5 Lakh and above.
- You should be registered for at least a period of 3 months on the PhonePe app.
Who is NOT eligible?
This is a minefield and you need to be very cautious here.
- If you come under the definition of a politically exposed person, you cannot get this policy.
- If you are a housewife, a retired person, or a student, you cannot get this policy
- People who have a history of Heart, Kidney disease, Stroke, Cancer, Hepatitis, Diabetes, Hypertension, COVID19 cannot get the policy
Wait there is more! In addition to these, we found a hidden declaration inside the terms & conditions link (image below) that most of us don't check. It requires you to implicitly declare that you don’t have a laundry list of health conditions like elevated cholesterol, colitis, kidney disease, or HIV/ AIDS.
In our view, if you have ANY disease or medical history YOU SHOULD AVOID APPLYING for this plan. You don't want your family to get another unpleasant surprise at the time of claims.
Other Important conditions you must know before you signup:
- This policy will not cover natural death in the first 45 days of the policy.
- Suicide is excluded in the first year, similar to regular term life policies.
- You should be a member of the PhonePe app (have the app installed on your phone) on the date of death, to be able to make the claim. In case you buy the plan - to avoid any hassles, ensure you do not uninstall this app ever.
- This is a 1-year policy, and not like regular term insurance policies that are for the long-term. This means that next year when your policy comes up for renewal (and in case you have a disease/ medical condition), it could be declined.
- The policy being a group policy, the coverage can be stopped on renewals, by the insurance company or PhonePe.
- Unlike regular term life plans, the premium can be changed based on the insurer's claims experience at the time of renewal.
Comparison of PhonePe Term Insurance with the regular Term Insurance Plan available in the market.
|Regular Cover||Phone Pe Group Cover|
|At what age can you enter the plan?||Usually from 18-65 years||Between 18-50 years|
|Entry Premium||Premium is different depending on the age and policy term||Flat premiums for all age groups.|
|Renewal Premium||Would remain fixed to entry premium||Can change based on claims experience|
|Proposal Form||Long proposal form with comprehensive details about health & lifestyle||Short proposal form with often hidden declarations about good health.|
|Documents Required||KYC, Income proof||No documents required|
|Medical Test||Usually required||None|
|Issuance||7-10 days after the medical test. Usually 15 days from payment.||Immediate|
|Waiting period||No waiting period||45 day waiting period for natural death|
|Exclusion||One year Suicide||One year Suicide|
|Income limits||More than 2 Lakh||More than 1 Lakh|
|Occupation restriction||It may not be available to people working in hazardous occupations etc.||Question not asked.|
|Cover limit||Unlimited - linked to your income||Maximum Rs. 20 Lakhs|
|Tax Benefit||Tax Benefit u/s 80C||Usually, no Tax Benefit|
This is a one-year policy: This term insurance offering from PhonePe is a group insurance policy. All group policies are one-year, short-term policies. The renewal of this policy is dependent on the continued relationship between the insurer - ICICI Prudential, and Phone Pe. In case the relationship ends, the cover will end on your policy's expiry date. Term Insurance is something that you should invest in for the long term, to protect the financial security of your dependents until you become financially free. With such an objective, this short-term cover, with no guarantee of renewal will not make sense.
No significant price advantage: Unless you are 40+ years of age there is no price advantage for you since the prices are very similar to the open market retail products for younger individuals.
Pricing can change: Also, the pricing can change based on your age and the claims experience of the insurance company - which is not the case in regular term insurance plans.
Be careful about the Hidden declarations: Some hidden declarations surprised us. We would recommend that you be very careful before you sign up for such a plan. Please understand and validate if you suffer from any illnesses listed. And, in case you suffer from any of the listed health conditions or medical history, just don't take this plan.
Do not get lured by convenience. Term Life Insurance is a purchase you make to plan for the long-term financial needs of your family - to provide long-term financial security for your family. If you are looking for long term financial planning - we do not recommend you rush and make an impulsive purchase of a group insurance product.
- Always check the terms and conditions links while you buy such a policy, and search for the word "group" to know if the policy is in the group category. -
- In case, you want to know if your existing policy is a group policy - just open your policy PDF and look for the words - "Certificate of Insurance", "Group Administrator" etc. Here's a detailed article we've written about group policies.
So who is this product suitable for then? This is a short term product and hence can be bought by someone who needs it for the short term - is young, fit, and healthy with no medical history - but won’t be able to arrange for income documents, or go through medical tests. For instance, if you have a young driver or full-time servant with no medical history they can be covered for term insurance at ultra-minimal premiums and no paperwork.
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Mahavir is the Founder at Beshak.org. Since 2005, Mahavir has been building tech-based startups that compare and advise insurance products to individual buyers. In his last role, he was the Chief Business Officer at Coverfox. Mahavir is a recognized professional in the personal insurance field. He has contributed to leading business publications, including The Economic Times, Business Standard, Mint, DNA, and Moneycontrol