Life insurance products are primarily bought from intermediaries such as individual agents, corporate agents (banks) or insurance brokers. All these are offline channels involving face-to-face interaction between the buyer and the seller. In addition, one may also purchase life insurance policies directly from insurance companies by visiting their websites. Yashish Dahiya, CEO & Co-founder, Policybazaar.com, says, “When you buy an insurance policy online, you are getting in touch with a company, as opposed to connecting with an individual. While the latter can retract his claims later on, the former cannot risk doing so considering what’s at stake. Also, the chance of being sold a policy that you do not require is low in case of online insurance, given that consumers tend to do their own research.”
Most life insurers offer pure term insurance plans online and a few of them sell unit-linked insurance plans (ULIPs) online as well.
Who should buy online: Buying life insurance online may not suit everyone. One needs to not only have a fair amount of understanding about the working of term plans and ULIPs, but also be able to comprehend and evaluate the different features available in the plans. “‘Online buying of life insurance policies, which do not warrant any medical underwriting, is most convenient. While buying online, since no one is there to assist you, it is better if you do a little bit of research with respect to choosing the sum insured and duration of the cover. If you are able to negotiate while buying, online insurance will not only save you time but also give you a tremendous cost advantage,” says Swami Saran Sharma, CEO, insuringindia.com.
Uniqueness: The distinguishing feature of life insurance plans which are offered online vs those which are available offline is in terms of cost. For almost all insurers, the premium of an online term plan is lower by 25 per cent or more than its offline version. Yashish says, “Since online purchase does not involve agents/ sales person, insurance plans bought online cost less vis-a-vis their offline counterparts. In fact, insurance companies usually pass on the benefits of reduced offline and distribution costs to customers and this brings down the premium amount.”
Similarly, the charges in an online ULIP are lower than that of an offline ULIP. The difference in premium or the charges arises due to the fact that there is no intermediary between the buyer and the insurance company, thus saving on costs.
Process: To buy online, one needs to visit the insurer’s website. After registering, one has to choose the plan and fill in personal details. The documents including address proof, income proof etc may have to be uploaded or couriered to insurer. Just in case one is stuck during the buying process, many insurers offer online help too. Either a representative is available for an online chat or the insurer may get back to you within a day.
Online Comparison: Online access to life insurance plans is also available through insurance aggregators who are essentially insurance brokers having an online presence. The websites of insurance aggregators work as comparison sites as they showcase plans of various insurers. “Customers are spoilt for choices in terms of options available online and hence, need to be very cautious at the time of buying a policy and refrain from buying plans merely on the basis of its popularity. Online insurance portals usually extend customer care services and you can connect with them anytime to discuss your queries and inhibitions about making online purchases. This way, you will be more confident about your decision”, Yashish adds.
This helps prospective buyers while selecting and choosing plans that suit their requirements. According to Saroj Satapathy, CEO, Ideal Insurance Brokers, “Choosing an insurance company may not be the easiest of tasks, given the plethora of insurers that are there today. If you are having trouble choosing an insurance company by yourself, take the help of a trusted insurance broker/intermediary, who you know has the financial acumen to make the right choice on your behalf.”
Pitfalls: Purchasing life insurance policies online has its own pitfalls which need to be avoided. One needs to keep in mind a few important things while buying insurance online. Speak to the insurer to understand if the online product meets your needs. Check out its flexibility in terms of the duration of the policy and the life cover. Also, most insurers make online purchase available only in a few cities and not all. Confirm the online availability of policies in your city from the insurer before proceeding to buy.
The purchaser has to buy the policy directly from an insurer by visiting its website as there is no intermediary while buying life insurance plans online. In the absence of an agent, the policy holder has to deal directly with the insurer for procedural issues such as change in address, nominations etc. One may even have to set up an appointment with a doctor to get the medical tests done during the buying process. Also, get a fix on how your policy will be serviced in the absence of an agent.
Not all term plans or ULIPs available online may be similar. One, therefore, may have to visit websites of several insurers before zeroing-in on the right plan. Saroj says, “There are five important things to watch out for while buying insurance online – price tag, insurer’s history, asset value of insurer, service quality of insurer and complaints and reviews of the insurer.”
Conclusion: Buying life insurance online needs to be an informed decision. One needs to read, understand and discuss the right way of getting protection before buying life insurance online. Experts suggest getting life cover of at least seven times one’s annual income. Go ahead, if you are un-insured or under-insured and buy a policy sitting in your office or home to spend a worry-free time with your family members but do your own research first.