Myth of Saving Money in Insurance, Buying Online and using a Broker.

Every day we are inundated with emails and ads from various Insurance companies and Web Aggregator sites that promise to save us big money.  How true are these claims? Do you really save money and is buying online any cheaper than buying from an agent.

First things that one should know is that before an Insurer can sell a product in the market the insurer must file the product with the IRDA, the regulator. In the filling it must specify the pricing for the product. Once the pricing is approved the insurer must stick to that pricing formula. It cannot give a discount to one distributor over another.  For most products that are sold thru multiple channels like Direct from Insurer Online, Web Aggregators and offline distributors like agents and brokers, the price is the same irrespective of where you buy from.

What online comparison sites offer is a price and feature comparison between products of multiple companies. It helps you decide which product is best suited to you. But once you have decided on a product, then the price is the same no matter where you buy from. In this scenario where you buy from is more a matter of convenience and comfort. In cases where the comparison sites offer you a chance to buy polices instantly, you may want to opt for that as it is more convenient.

Are there any instances where you may still want to buy from a Distributor? The answer depends on your own comfort level with buying online. In case of life insurance policies you will need to submit documents for underwriting and may need to undergo a medical test.  If you are too busy to do these things on your own and follow up with the insurer, an agent or broker may be of help.  You don’t pay anything extra for taking their help and don’t save anything if you don’t.  One word of caution before you engage an agent. Make sure he/she is able to give you a choice of companies and products to choose from. Avoid people who always steer you to one product or refuse to give you a choice. Beginning of the year IRDA has allowed Brokers to start selling insurance online. We should start to see to brokers who supplement their physical sales force with online selling. Hopefully this will allow the customers to have best of both worlds.

Having said this there are a few products that are online only.  These are products can only be purchased Online either thru the Insurer directly or other Online distributors.  You cannot buy these products offline thru agents and brokers. Number of such products are growing and as the web sales catches up, you can expect more of such products.

Finally my advice to the customers is to compare insurance policies before buying.  Depending on your comfort level buy online or go thru broker. Better yet look for brokers who have online presence and buy from their site. Should you need manual assistance you can always call upon them for service.

Policylitmus