Some years back if you wanted to buy an insurance policy the only way you could get information was through an LIC agent , but with the opening of the insurance sector now you have more than 14 life insurance companies each one of them offering multiple options for your insurance need.

Each life insurance company has something different to offer based on your requirement. Because of stiff competition life insurance companies are trying hard to innovate products in their portfolio. The ultimate beneficiary of this competition is obviously 'YOU' the consumer, with more choices along with lower prices on offer.

Before we get into the benefit of comparing life insurance products, It is important that first you decide what kind of insurance requirement you have and which life insurance product best suits your requirement.

Once you have decided about your requirement and the life insurance product you want to buy, things become very clear.Let's assume that for this particular illustration that your age is 30 years and your have decided to take a pure life insurance cover without any profit/residual value such as a term insurance policy.

We are taking term insurance policy for our calculation because it is the most preferred form of life insurance across the world and also the most simplest to understand. One more reason is that the term insurance policies offered by insurance companies are more or less similar in structure. We are trying to find out how much you can save by comparing the prices offered by life insurance companies in India , It's a very simple calculation but sometimes we ignore the smallest and important peace of information in life.

Assuming your age to be 30 years and your want to buy a term insurance cover of Rs. 25 lacs and the life insurance cover is for 25 years (Payable Annually)

Now each insurance company will have a different price for the above mentioned requirement. The price for a 30 year male with Rs.25 lacs cover with a term of 25 years will vary from Rs.7000 to Rs.12500

How do you know which of the life insurance company is offering the lowest price :

Option I is calling each company and asking for a quote.

Option II is visiting the respective website's of insurance company and find the prices

Option III ( Now very popular and the easiest) logging on to the website www.getmeinsure.com and applying online.

In case you have not used the above three options for comparing the term insurance product or the price and bought the insurance because some tele-caller called you and explained that his company's product was the best. You are lucky if your premium is closer to the lowest price. But if you have bought the same policy for say Rs. 10,000 ( not taking Rs.12,500 you will say I am an extremist) you just lost Rs.3000 or better put you have given your hard earned Rs.3000 to the insurance company (Please do tell me the insurance company name, I will buy their Equity share if it is listed.) Let's say you would not mind Rs.3000 lost ( I know you are a generous kind ), but you are forgetting that you will be paying this extra Rs. 3000 for the next 25 years and the loss would be (25x3000) Rs.75,000 ( =A trip to Mauritius with your wife ? ) Now you don't look so generous do you.

In financial terms we calculate on the basis of opportunity lost in generating more returns from Rs.3000.If you had invested this amount in a fixed income security such as fixed deposit or equity markets you would have got a median return of say 10% compounded annually. What we mean by this is that every year if you had invested Rs.3000 for 25 years at the rate of 10% compounded annually you would be richer by Rs. 3,24,545. That is a very high price for a term insurance policy. If you still do not believe me open your excel sheet and work the calculation yourself.

So the next time around you plan to buy an insurance cover it definitely pays to get the best cover along with the best prices. The same could be the case of Health Insurance and Auto Insurance. Compare , compare & compare again before you buy.

Krishan Dwivedi
Getmeinsure.com

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