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The internet has penetrated widely across the world including India. Most Indians use this medium for various purposes such as research, email, and much more. Furthermore, individuals are becoming more comfortable using this virtual medium to conduct financial transactions.
Traditionally, individuals acquired insurance policies from an agent or a broker. This is a long and tedious procedure, which also requires plenty of documentation. As seen in several other sectors, the internet has also positively modified the conventional way of purchasing insurance.
The insurance sector has seen an increase in the number of people who choose to acquire policies online. As a result, most insurers offer this option to users through their websites. The internet provides individuals with an easy way to compare different products offered by various insurers, which helps in making informed decisions.
Within the insurance sector, it is observed that a majority of users opt for online insurance plans because these are often cheaper than offline plans.
Here are four reasons that make online term insurance a more efficient and economical option.
1) Simplicity
Term plans are one of the simplest types of life insurance policies. These policies pay the benefits to the nominees in case of the demise of the insured within the tenure of the plan. Most insurers do not offer any survival benefits under these plans. Term plans are fundamentally simple that makes it easier for a layman to comprehend these policies. Therefore, opting for online term plans is advisable since it is easy to understand and a convenient option.
2) Zero administration expenses
Insurance companies incur several expenses when they offer policies offline. These include administrative expenses, selling and marketing costs, as well as commissions that are paid to the insurance agents. Generally, these costs are passed on to the policyholders. This makes buying offline insurance more expensive. Furthermore, offline policy involves tedious and cumbersome paperwork, which increases the time required to avail of the plan.
In comparison, online term policy does not entail extensive paperwork, thereby reducing the time. Moreover, insurance companies are able to decrease their administrative and selling expenses, which translate into lower premiums for the online buyers. Although the insurance companies need to spend money on developing the website and maintaining the same, these are nominal expenses when compared to the large overheads incurred while selling offline policies. Most insurers use the low-cost advantage while promoting online insurance purchase to their customers.
3) Lower risk factor
Online transactions allow insurance providers to profile their website users. This allows them to track the frequency of use, which enables insurers to provide better services through their website. The service providers may assume that online insurance buyers are educated and health-conscious. Furthermore, they may have increased access to healthcare services and health insurance policies in comparison to non-internet users. This improves the quality of their health, which reduces the risks for the insurance companies.
The service providers are able to acquire more information about the online buyers. Generally, the companies are unable to gather required information when policies are purchased offline. This is due to time constraints, brokers or agents, and issues like incomplete forms. As mentioned above, online buyers are positively perceived by the insurance companies. They believe such users have a low possibility of mortality and morbidity, which further reduces the costs of online insurance policies.
4) Busting claim repudiation myths
It is commonly misconceived that the lower costs of online policies are because of the claim repudiation or denial by service providers. However, the fact is that online application forms are very comprehensive and ensure buyers provide accurate and transparent information at the time of acquiring the policies. This means if there is a need for filing a claim, the possibilities of these being repudiated are very low. Individuals may also check the claim settlement ratio of different companies online before purchasing the policy, which further reduces the possibility of claim repudiation.
Online term plan are an excellent way to acquire the necessary life coverage without paying high premiums. The above-mentioned factors decrease the cost of acquiring online insurance coverage while also reducing the time and efforts. Furthermore, most online insurers offer flexibility to customers, allowing them to buy a policy that most appropriately suits their personal needs. Online insurance comprises a large percent within the overall insurance market, which is further expected to rise in the future.