Buying Insurance – Online Vs Offline through an Agent

Buying Insurance – Online or offline from Agents ?

Before Purchase

Assess your needs:

You can get Professional Help in computing your insurance need and find out insurance amount and term required for your family situation.

Independent Research and Comparison:

A smart customer shopping for insurance plan has to talk to several insurance agents, do some research on their own, compare the plans before deciding on a plan. But this is not easy for everyone. Comparing Policies across different insurance companies require some financial skills as well as lot of time. Not all investors are made for that.

For example, a average insurance buyer tend to look for cheapest premium. When it comes to insurance purchase, cheaper does not necessarily the best option to buy. He does not know about settlement ratio (how many claims are processed by the insurance company to the total claims received by the company? ) or solvency ratio ( is the company financially healthy to pay the claims in future ?).

Agent’s Affiliation to one company:

Individual Agents are linked to only one insurance company. They push customers to buy only their company plans. Expecting an objective analysis is futile. They highlight only the benefits of their company plans and fail to mention the disadvantages.

Unaware of Competition:

Usually majority of the Agents are very knowledgeable on their company products but we can’t say the same thing about other company products. They may not be up to date on the new product releases in the market from other competing insurance companies.
Hence you may end up with inaccurate information during comparison and end up buying an expensive product from the agent.

Buying too big insurance:

Some investors are very conservative and cautious. Without proper guidance, they end up buying too big insurance. These investors end up buying a cover too large for their needs or choose a term longer than what is needed.

Buying a too large cover or choosing a longer duration will increase the premium cost. Few also end up buying too large cover for very long duration. Insurance is not an investment. It is a necessary expense. Money saved is money earned.
A Professional advisor can guide you in choosing the right insurance amount and choosing appropriate term for your need. This could help you to save some money that can be put to use for another purpose.

Buying too small Insurance:

Some investors are directly opposite in nature. They under estimate their insurance need or try to be prudent to save money. These investors put their family in big trouble after their untimely demise.
Not all insurance plans are expensive. Buying right cover for the family is important. Instead of buying money back plans, buying a term plan could give you larger insurance cover for the same premium.
A Professional advisor can guide you in choosing the right insurance amount and choosing appropriate term for your need within your budget.

Addition of riders, waiver of premium:

Investors are given options to buy few riders along with their insurance plan selection. Most of the investor are not aware of the advantages or disadvantages of them, and end up making mistakes.

Offline Policies are expensive:

Yes, this is partly true.

Almost all major insurance companies have term plans that are cheaper when bought online.
But the same can’t be said about other plans like traditional endowment plans or Unit linked insurance plans (ULIP) or Pension Plans. These plans cost the same thing whether you buy them online or offline. If that is the case, why not use the services of the agent for no additional cost?

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During Purchase

Buying insurance online is not just few mouse clicks:

Many investors are led to believe buying an insurance plan online is as easy as posting in the Face Book or twitter. We wish. It is not like buying an air ticket or train ticket, where after few mouse clicks you have print out your travel reservation. You are only making a proposal for insurance and there are several steps that need to be completed before a policy is issued. The insurance industry and regulatory requirements are not matured enough as of today. They are complicated enough and get the online buyers to run from pillar to post.

Filling up application form:

Agent also can help in making sure there are no errors in insurance application form. Several policies are rejected during the claim (when you really need the money ) due to incorrect information in the form. The main objective of buying the insurance cover would go up in the air, if a claim is denied. Not many investors understand the details requested in the form and need some or more help.

Many online insurance buyers tend to judge certain questions with their limited experience and knowledge and provide vague answers. And End up buying wrong policies.
Situations like this going with a professional help is recommended.

Tracking your Application:

After a form is submitted with the insurance companies, an agent would follow up with medical test team to conduct the medical tests in a clinic in your nearby location. And get the medical reports submitted to the underwriting team on time.

When you are buying from online, you may end up talking to different customer service representatives every time and may have tough time to track your application processing.

Non-disclosure of material information:

Lot of investors don’t understand what information provided in the form are material information and what is not. While filling up an application online, things are left to their own discretion.

Someone who drinks regularly may hide the fact during filling the questionnaire, thinking it is not important, may find their application form rejected during medicals or worse, his family claim rejected if any unfortunate thing happens to him.

Going through an agent would have helped him to disclose accurate material information to the insurance company and saved lot of his beneficiary time and mental stress during claim.

Software /System issues:

If you Google, you will find several customers complaining about how they got stuck and struggle with online insurance purchase.
Another buyer completed all data entry and encountered internet error during payment and had to lose all data entered and had to repeat everything he did in last 30 minutes.

Another buyer got his money deducted but did not receive any calls for medicals. And had tough time in getting the money back from the insurance company because the company could trace his payment and link it with application properly.

A NRI, with foreign citizenship and dual citizenship returned to India for good, tried to buy insurance online and he was not allowed to enter his nationality. The software/system assumed everyone is Indian citizen and his policy was issued with wrong nationality. When insurance companies are rejecting claims for silly reasons, the onus is on you to make sure all data are correct. Do you really want to take your chance online?
In another 2-3 years time, may be the industry will be ready but not today.

After Purchase

Monitoring/Maintenance of insurance plans:
Apart from renewal of insurance premium, time to time, we have to assess our insurance need and make sure it is in line with our financial goals and risk cover required for changing situations in our lives.

Remember to pay renewal premiums:
Many of us with our busy lives forgot to pay monthly bills. Annual bills are even worse. Leave the due date; we would not even remember the month when a policy comes due. Since agents are paid a commission, they are very prompt in reminding the clients about their due dates and make sure the policy premiums are paid on time.

Claim Processing:
An insurance agent who helped you to buy the insurance plan develops relationship over a period of time with you and your family members.
Having a professional adviser representing your family during the claim process will help to alleviate lot of your family trouble later, when they wish to make a claim on your death.

So, it is easy to see there are several advantages in buying the insurance offline from an insurance agent as opposed to buying online. But online process helps you to compare insurance plans without a bias and may help you to choose the right, inexpensive product and help you to save some money.

We assist our clients in Insurance Requirement Analysis and in selection of proper insurance plans as per their financial needs. We recommend plans from all insurance companies, unbiased.

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