Ch. 5: Where to Buy Term Insurance From?

Some lessons are learned the hard way. This should not be the case with your term insurance policy.

When you decide to buy a term insurance plan for yourself - you will be faced with several choices as to where and how you can buy the insurance policy. From agents who are family friends to online aggregators like Policybazaar or Coverfox - who offer enticing offers and discounts - each option comes with different pros and cons.

Here we have created a thorough comparison of all these buying options so that when you set out to buy a term plan, you can make the right, tailor-made choice for yourself.

Buying through agents is the most traditional way of purchasing insurance - and most of our parents and grandparents have done just that.

What are the benefits?

• There is an amount of comfort buying insurance from people we know and agents provide that comfort.
• Usually, the agent becomes a family friend over time with a personal touch and introduces us to interesting, new products across insurance companies as they come.
• If they live close to you, in your neighbourhood or they are friends or family, then they have a reputation to live up to. This considerably increases the chances of end-to-end support from them.
• Since they know many members across your family - they will have a good picture of your needs, budgets, and preferences.
• A few of them may also provide exemplary assistance at the time of claims. Your nominee will have able support at the time of claims locally, and not have to run around for claims or paperwork.

The flipside -

• As per IRDAI regulations, an insurance agent can only solicit insurance from one insurance company each in Life, Non-Life and Health Insurance category of business. The choice an insurance agent can offer can hence be limited.
• Further, when you go through agents, you will often have to pay the full price of the plan without any possibility of discounts.
• Lastly, if the insurance agent decides to give up his agency or move to a different town or retire - and he does not have an office that manages the policies and renewals, you might be all on your own. Always try to deal with an agent who is experienced, committed, and has processes, infrastructure, backup resources that can support you when he is not around.

Shopping at a supermarket is very convenient as we get a variety of products under one roof. Likewise, banks have now become supermarkets where they sell several financial products, including term insurance.

What are the benefits?

• You don’t have to deal with multiple people, repeatedly provide documents when you deal through your existing banking relationship. You, in fact, end up solidifying the relationship with the branch and the officers there, which can help you in the long run.
• Documentation requirements could be relaxed when buying through a Bank, as usually you would have already submitted documents (for instance for KYC) to the Bank - which can be used for processing your application with the insurer.
• Banks may offer special offers on term insurance plans to their account holders, and the process could be simple and time-saving.
• Some banks invest into technology platforms to make the purchase process easy for you.

The flipside -

• As per regulations every Bank is permitted to sell only one insurance company’s policy in Life, Non-Life & Health Insurance category. You might hence not have a wide variety of products to choose from at a bank.
• With bank policies, you don’t have the opportunity to compare all products, customisations etc.
• Further, you’ll need to connect directly with the insurance company for services or claim assistance..

In all, there are around 20 online aggregators across insurance products in the country right now.

What are the benefits?

• Aggregators are built as technology solutions, offering easy access to insurance plans across companies, in one shot.
• They allow you to compare products across insurance companies and offer free advice to help you make a decision.
• They can also get you exclusive products, discounts, special services and offers for certain products.
• Further, since you’re dealing with an organisation - not an individual - you will have institutional support in the form of a call-centre or email support throughout your purchase journey.

The flipside -

• The transaction is managed through a call-centre or an online process, and so you may have to speak to a different person every time after you make the payment .
• Often, such companies offer very basic customer service at their end, and may redirect you to the insurer’s call centre or branch office for service requests.

Finally - you also have the option of buying your policy directly from the insurer’s website.

What are the benefits?

• When you buy directly on the insurance company’s website, they might offer you some benefits and discounts which aren’t available anywhere else.
• Some insurance companies have built decent technology platforms - websites and mobile apps - to help you go through product details and make a purchase online, without ever having to visit their branch office.
• You also have the benefit of interacting with an organisation here, so even in case the person who introduces a policy to you retires/ moves on - there is a system to support you.

The flipside -

• You cannot compare products across different companies automatically. You’ll have to manually scan, make notes and then compare.

Buying a term insurance plan is important, but making the correct choice can be really daunting. One needs to check all the boxes with regards to different parts of the policy. Choosing the right outlet really comes down to a matter of personal preference and choice. Carefully compare all features, benefits, advantages and disadvantages to zero in on the most suitable product for you and your family.