Life insurance is a unique product. As it’s a high involvement purchase, you tend to spend time with your financial planner discussing financial goals, comparing plans, reading the brochure and checking the illustrations to finally choose one that suits your needs.
That’s how a life insurance has been sold for ages. On the other hand, it’s hard to imagine replicating this involved buying process online just as easily as purchasing either an airline ticket or a book, online. This might be hard to believe, but insurers are working hard to make this change happen. Why? Here are quite a few reasons.
India’s Online Population
India’s growing online population is hard to ignore. According to Google, with 8% of the total online population of 1.2 billion, India is outranked by only the USA and China in the list of countries with the most Internet users. The proliferation of high-speed 3G and 4G telecom networks in the country and the spread of low-cost smartphones will further spread and support the use of Internet in India. This growth along with the fact that more online users in India are willing to make purchases through the Internet makes the online story very compelling. Overall, the ecommerce industry is poised to experience a high growth in the next couple of years.
Insurance companies are also exploring cost-effective modes of distribution since they are constrained by regulations on the charges they can extract from a product sold to a customer. Disintermediation through an online platform is seen as a way to reach out to customers in an efficient way. Though the online channel, as of now, does not contribute significantly to the total sales pie, this mode of distribution is expected to gain solid momentum in the coming years. This is also in line with what we are seeing in some of the developed markets.
Financially Aware Customers
The young demographics that constitute a significant market segment is more comfortable evaluating and controlling their choices, which the online platform allows for. Online life insurance plans are targeted at an informed customer who understands his/her liabilities and the extent of cover needed for them, and who is also fairly conversant with online purchase practices. This is a customer who is comfortable completing the purchase of an insurance policy with little or no assistance from a financial planner or the insurance company.
These points are strong incentives for a life insurer to work towards creating an online platform that is comprehensive to aid a high involvement purchase. The good news is that a lot of insurers have already succeeded making online platforms even more attractive because of the smart prices.
How to Start and Manage an Online Life Insurance
You simply log on and key in details such as age, occupation, pre-existing diseases and other personal details. Most insurance companies allow you to choose a policy on the basis of sum assured in case of death or on maturity of the policy. You can pay by a credit or debit card or use online bank transfers.
As the life insurance company would need your documents for the ‘know your customer’ (KYC) compliance formalities, a company representative would come over and collect proof of identity, address, date of birth, etc. Alternatively scanned and signed copy of the documents can be submitted online by the customer or can courier it to the life insurer. The policy documents follow a few days later. Also, a medical test might be required depending on the life cover that’s selected.
Managing an online life insurance plan is similar to a normal plan, and can be conveniently tracked online. As a life insurance contract is based on utmost good faith, it is critical for an individual to adhere to complete disclosure of material information while applying for the policy.
Advantages of Online Life Insurance
The online platform lowers the distribution costs and allows customers to buy directly, thereby pricing the product attractively. Moreover, the customer is more informed about the plan and its features, which in turn aid in making an informed choice.
Today, several life insurance companies are offering online term plans with highly competitive pricing. Several insurance players also offer great discounts online. You may expect savings of 20% to 30% on premium payments on online term plans.
The process is simple as well. As most online life insurance buyers are informed customers and are already aware of the product they wish to purchase, online buying process helps them enjoy the user experience.
You can buy insurance from home without spending hours at an agent’s office. All communication happens via emails or SMS, which are faster and more reliable than courier or post. Payment process is also like any other ecommerce transaction. So, it is quick and convenient for a tech-savvy buyer.
Most importantly, the online platform lets you compare plans offered by diverse companies. The price of the term plan, claim settlement history and the company brand name are the parameters that you must evaluate before deciding on the company and the product.
Mr. Tripathy joined HDFC Life in 2004 and has been responsible for Marketing Strategy, Brand Planning, Advertising, Communication & Media, Customer Insights, New Product Development, Product Life Cycle Management, Online and Digital Strategy, E-Commerce, Customer Analytics, & Corporate communication. He started his career with GCMMF Ltd. in 1992. Since then he has worked with various reputed organizations like Frito-Lay (PepsiCo), Mattel and Reliance Infocomm before moving on to his current role at HDFC Life.View Complete Profile
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