Pros and Cons of buying Life Insurance Online


Online shopping has become a way of life for many. Increasing penetration of smartphones and reduction in data charges have made it possible for companies to reach out to a much wider audience. Realizing this and seizing the opportunity, most life insurance companies have started selling their products online. Some companies have even designed products to be sold exclusively online such as ICICI Prudential i-Protect Smart Online Term Insurance Plan, LIC’s e-Term Plan, Aegon Religare i-term plan etc. According to Digital@Insurance-20X By 2020, a Google-BCG report, by 2020, six per cent of all insurance sales in India will occur online*.

As more people go online due to the flexibility it offers, it is imperative to know the pros and cons of purchasing life insurance online so that one can make an informed decision.

Pros of Online buying:
1)    Vast choice – You can review products of various life insurance companies on aggregator websites like policybazaar.com, policyx.com, comparepolicy.com etc and make product and price comparisons. Thus, you can narrow down the product which is best suited for you in an unbiased manner. In the offline channel, agents often hawk products which earn them more commissions or help meet sales/competition targets. Also, you may not get to know of better suited products offered by competitors as the agent will advertise only his company’s products.

2)   Discount on premium – In the online model, the contract is directly between the company and the customer. As there is no intermediary in between, agent commission is not payable. Also, being a paperless transaction, there is further reduction in costs. These reduce the premium by 25-30% as compared to the offline model.

3)   Higher coverage – Some insurance companies provide higher sum assured and relax maximum age limits when buying online as insurers believe that online customers are more financially well off and thus have better access to healthcare facilities.

4)    Prevents Mis-selling – As the purchase decision is largely self-driven, mis-selling rarely happens as the customer does adequate research on his own before buying a product.

5)  Get reviews/feedback – There are various online forums such as Mouthshut.com where existing policyholders provide their experience and feedback on after sales service and claim settlement experience. This information can help in taking a judicious decision.

Cons of online shopping:

1)    Plain vanilla products sold – Most insurers sell only term plans online (though some offer ULIPs too) as these have basic features. Also, some online plans do not have the option to select riders.

2)     Susceptible to frauds – There are instances of people falling prey to fake websites. Thus, one needs to tread with caution and be sure that the website is genuine.  

3)   No help in filling application form – Any false or inaccurate information about personal or medical history can lead to rejection of claim on the grounds of misrepresentation of material facts. In the offline channel, the agent is trained about the importance of providing complete and accurate information and guides the customer in filling the application form accurately.

4)    No help in understanding the fine print – When you buy online, you may pay more attention on getting the highest sum assured for the lowest premium, in the bargain overlooking crucial product features such as duration of the policy. Also, life insurance contracts have various exclusions, terms and conditions and jargons which may not be understood by all. When one buys offline, the agent explains the product and any queries that one may have can be instantly resolved.

5)    No help with servicing issues – You have to personally co-ordinate and chase the insurance company for any servicing issues, queries or transactions unlike the offline channel where the agent can assist.

6)     No help with claim submission – In case of a claim, you or your dear ones will need to personally co-ordinate with the insurance company.

Conclusion:
Online premiums are much lower than their offline counterparts but you need to ensure that you are not swayed by this alone. You also need to be capable to compare and choose the best policy from the various products available online. Further, be prepared to handle all aspects from policy issuance to claim settlement directly with the life insurance company. If you are comfortable with these, then probably online is the best way for you.


*http://www.business-standard.com/article/management/the-future-of-indian-insurance-is-online-114061500625_1.html

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