Why Term Insurance is Cheaper When Purchased Online

Term insurance can be purchased online or offline, depending on your preferences. People often check the details of term insurance, compare policies and evaluate premiums online. The overall percentage of people buying term insurance online has been rapidly increasing due to different factors such as convenience, transparency, and the ability to compare policies instantly.

In addition, online policies are comparatively cheaper than those of offline counterparts. Since the cost of a service is a decisive factor for Indian customers, this remains an important consideration. Let us discover why buying online is cheaper and how it could be a smart decision.

Factors Contributing to Lower Cost of Term Insurance Policies Online

1. Elimination of Intermediaries: When you buy term insurance online, there are no intermediaries (such as agents and brokers) compared to the conventional channels. In offline channels, an insurance company must pay commissions to the brokers and intermediaries, which is included in the premium amount. This commission makes up for the efforts made by the agent to provide insurance services to the customers.

The commissions can range from 5-20% of the base premium. Hence, when you buy insurance online from a platform, such costs are reduced as you deal directly with an insurance company. The commissions are quite low (or zero in a few cases), and the cost benefits are passed directly to the customers.

2.Reduced Operational Expenses: Compared with conventional channels, the overall operations costs are quite low in online channels. Even though setting up a secure online platform and managing it requires costs, it is still lower than the bricks-and-mortar setups needed in every district of the country. Traditional methods involve extensive paperwork, from policy applications to approvals, and require significant human intervention, adding to administrative expenses. Moreover, maintaining physical offices and handling large volumes of documentation further drive up costs.

Automated systems not only eliminate the need for all these manual processes but are also quite effective, and the potential for human errors is quite low. Policies are issued quickly, the KYC process is quicker, and the client onboarding takes not more than a few minutes.

3.Enhanced Transparency and Customer Empowerment: Online platforms empower customers by offering unparalleled transparency and ease of access. They allow buyers to compare multiple policies based on premiums, features, and benefits, helping them choose the most suitable plan. It is easier to compare plans, benefits and exclusions. You can ask any question through a medium suited to you and, hence, make a well-informed decision.

Customers do not need to fix appointments or visit the insurance company’s office for the entire process. The level of control that a potential buyer enjoys in an online setting is quite unparalleled. This is why online platforms have grown rapidly in popularity and acceptance.

Addressing Common Misconceptions About Online Term Insurance

Here are some of the most common myths about buying term insurance online busted:

Concern vs. Clarification

Summing up

Buying term insurance online is hassle-free and quick. You get all kinds of coverage, it is easier to compare plans, and the customer support of online platforms is often impeccable. Most importantly, due to eliminating intermediaries and reducing operational costs, buying a term insurance policy online is way cheaper than the conventional routes. You get similar protection and sum assured along with different add-ons at a 5-20% lower premium than offline modes.

FAQs

Why is term insurance cheaper online?

Term insurance is cheaper online because it eliminates intermediaries, reduces operational costs, and enables direct transactions with the insurer.

Is online term insurance safe to buy?

Yes, online term insurance is safe as policies are issued directly by reputable insurers and hold the same legal and financial validity as offline policies.

Do online term insurance policies offer the same claim settlement process?

Yes, the claim settlement process for online term insurance is identical to offline policies, with added efficiency due to digital systems.

Can I customize my term insurance policy online?

Yes, online platforms allow policy customization with add-ons like critical illness coverage and accidental death benefits during purchase.