With constantly advancing technology, millions of active internet users, and life insurance becoming a major participant in the e-commerce boom in India, online insurance purchase is rapidly growing in popularity.
The traditional way of selling insurance involved dependence on agents, brokers, consultants, and insurance companies’ in-house sales support. However, over the years, this method has proved inefficient and costlier. The online method on the contrary, directly engages insurance-seeks through portals, ensures seamless ‘delivery’ of the insurance product, and without the involvement of an agent, there is no payable commission either. Online purchase of insurance policies is therefore quick, transparent, effective, economical, and has helped insurance companies iron out cost and time inefficiencies.
The online mode of availing life insurance is a lot more economical than offline. Most online term life insurance plans are cheaper by a whopping 50-70% - sometimes even more, when compared to their offline equivalents.
This is firstly because there are no intermediaries and one directly deals with the insurance company, eliminating intermediary costs. Secondly, most insurance companies work on the belief that the mortality risk is lower in case of customers who purchase policies online, in contrast to those who buy policies offline. Hence, they offer comparatively lower premiums in the online mode. Online policies therefore work out cheaper - one can get a higher cover for a lower premium and unnecessary costs are done away with.
On an average, the total sum assured tends to be higher in online term life insurance policies, primarily because of the overall lower costs involved. It can also be attributed to tactful marketing strategies of insurance companies, who promise surprisingly low per day/per month costs for an online insurance policy. It is likely for one to see attractive advertisements claiming how an insurance policy worth several lakhs or even crores comes at a nominal per day or per month premium.
In addition, for online policies, medical tests are not always mandatory. Insurers insist on medical tests only if the sum assured exceeds a specified amount, usually over INR 50 lakhs and above.
Online term life insurance plans with massive life covers are available by paying just a few thousands as premiums, in contrast to similar policies bought offline. This ‘low premium for a high over’ concept is only available for online insurance buyers, because the company saves on the insurance agents’ commissions and passes on the benefit to buyers.
Several insurance aggregate portals in India allow online comparison of various term insurance plans. These portals are also an avenue to read online reviews of insurance products. This makes it easier for insurance shoppers to understand which term plans offer maximum benefits at affordable premiums, and are best aligned to their needs.
The old school way of buying life insurance policies was synonymous with cumbersome paperwork and a blind trust on agents. Contrarily, the online buying process is a Do-It-Yourself (DIY) concept - it involves filling up of simple online forms with relatively lesser information. This also prevents policy mis-selling.
When buying a policy online, everything about the product in question is open – features, tenure, riders, customer experience, even the applicable regulatory action as the case may be. Insurers can therefore no longer keep any information from a prospective buyer, ensuring complete transparency. Further, while purchasing a policy online, when the details are filled and the form is submitted, the person gets the necessary email or text message to track the current application status and state what is the next course of action.
As mentioned above, insurance companies provide all details regarding the insurance product clearly on their website. Customers willing to make an online policy purchase can quickly access this information and make an informed decision, without having to depend on agents or third parties with vested interests.
After buying a term life insurance policy the conventional way, people are usually unable to access their policy details as and when required. However, in case of a policy bought online, one can log in to their account to check all policy details at any time.
An online policy offers flexibility in the sense that at any time information can be edited/added/deleted. This applies prior to submitting the form during the purchase and even after the policy has been bought (corrections/changes can be made to address, mobile number, email, etc.)
With widespread social media use and constant customer discussions therein about experiences with brands, checking any insurance product and insurer’s reputation online is now a piece of cake. Customers gladly share their experiences with regards to the claims settlement of a particular life insurance product and/or company. This helps buyers make better purchase decisions.
Considering the above factors, the online term insurance plan wins hands down. It is however recommended to compute the exact amount of insurance required and truthfully declare all family and personal health facts – even if it means paying a slightly higher premium.
As much as buying insurance online offers several benefits, no advisory is involved. The onus therefore is solely on the customer to pick a product that fits his/her financial plan perfectly after dedicatedly doing the necessary research. And never forget - insurance is based on the "uberrima fides" principle - meaning utmost good faith.