For a generation that has quickly got hooked to shopping almost everything online, the growing popularity of online insurance was a natural corollary. That buying insurance online costs you much less has further helped raise its popularity.
While online purchases still represent only a small component of insurance activity in India today, the influence of the internet on insurance purchases is growing rapidly.
So why does an insurance plan cost less when bought online compared to when its bought offline? Unlike a traditional insurance product, an online insurance plan doesn’t involve any intermediary and the customers buy the product directly from companies, which saves the fee paid to the intermediary and also overhead and paperwork costs. And the insurers pass on such cost savings to customers.
Since online insurance plans have lesser add-on costs factored into the purchase, they tend to provide a comparatively higher insurance cover, which also works out as cost saving for the customer.
Since online insurance buying doesn’t involve an intermediary or agency, there is very little scope for miss selling and there is full transparency of the policy benefits and exceptions available and it’s up to the individual to do the due-diligence. Also, since people going online can also compared various insurance products on the many platforms available, it forces insurers to stay competitive which on one hand helps raise the customer’s awareness about various products and on the other hand brings down the cost of the online insurance plan. It also ensures that the product information provided to the customer have to be accurate and up to date, thereby resulting in absolute transparency.
This makes it easier to evaluate a product, as it allows comparison of product features and policy nuances in real-time to understand the implications of a particular purchase before committing to it.
With the advent of social media and various customer forums and websites, a buyer can tap into a lot of information and collective experience of other people and get an idea about the track record of a company, financial or otherwise, and the satisfaction levels of its customers. This is of immense help as it helps a buyer make an informed choice.
But do remember, the onus of doing thorough due diligence and evaluation of the product is entirely your when you go for an online product and it is very necessary that your spend sometime understanding the product before you click buy.