Why Should You Buy a Term Insurance Plan from an Insurance Provider instead of an Aggregator?

Why Should You Buy a Term Insurance Plan from an Insurance Provider instead of an Aggregator? 1

Why Should You Buy a Term Insurance Plan from an Insurance Provider instead of an Aggregator? 2

Affordable insurance plans promise financial protection as well as stability to your loved ones in case of any unfortunate event. Term insurance plans are a kind of life insurance that offers coverage for a specific number of years. These policies offer high cover at low premiums. For instance, a ₹1 crore term insurance cover could be as low as ₹490 per month. These fixed premiums can be paid either at once or at regular intervals over the policy term period.

Best way to purchase an Online Term Insurance Plan 

Term insurance plans these days are available at a low cost and will provide risk coverage and financial stability to your family in your absence. Online term insurance policies can be 20 to 40 percent less expensive in comparison to offline policies. This major cost difference is the reason why people prefer an online term plan.

You have the option to purchase term plans either through web aggregators or directly from an insurance company. Web aggregators claim that the biggest benefit of buying from them is that you can compare several term plans and secure the best deal. They also state that since no agent is involved and the entire process is quite transparent, customers stand to gain a lot. However, the process is not as straightforward as they make it out to be. To understand better, let’s take a deeper look to ascertain their claims.

Why Opting for a Web Aggregator to buy a Term Plan is not a good idea 

Though web aggregators offer a wide range of products online, they rarely provide any detailed information on it. Aggregators provide simple price comparison and make money by listing products and through ads. They generate leads and sell them to insurance providers or brokers. Some of them serve as brokers themselves providing recommendations along with lead generation. This arrangement increases the risk for aggregators as they may end up giving bad advice.

Moreover, they may not be able to provide the best customer service as they don’t have any specialists on their team who deal in the insurance domain. This is when you can turn to the official websites of insurance providers to purchase the term plan. They will always have a team of specialists to answer all your queries at once.

Another concern about trusting web aggregators is whether the customer’s data is really secure with third-party aggregators. A reputed insurance provider will always follow regulatory policies and will keep customer data secure and safe. Online aggregators often face issues in meeting the technical requirements and cannot provide information on all the term plans available. The complexity of insurance contracts is yet another hassle and this is the reason why there is a limited scope that an individual may end up choosing the most convenient alternative.

It is uncertain for potential customers to benefit from the lowest prices on the market. With term insurance plans, it is not easy to compare them just like smartphone features. The process is quite complex with many insurance providers offering different products at various price points and added bonus features. The process is not as straightforward as it appears to be.

To illustrate with an example, the ICICI Pru iProtect Smart Term Plan may carry a premium that is comparative with other plans in the industry. However, the policy also comes with the option to add the Accidental Death Benefit feature, with which you get an additional pay-out of up to ₹2 crores. Thus, if your base term plan gives you coverage of ₹1 crore, then you can get ₹2 crores with the Accident cover. You don’t get to see this fine print when comparing insurance plans on aggregators.

Another point that is most overlooked by consumers when seeking term insurance is about the Solvency Ratio. It is nothing but a value that determines if the insurance provider is financially capable to settle claims of customers. The IRDAI dictates that every insurance provider has a solvency ratio of at least 1.5 or higher. In other words, the higher this value is, the better it is for consumers. While this ratio for many insurance providers hovers around 1.5 – 1.8, ICICI Pru Life maintains a value of 2.15. Once again, rarely do web aggregators mention this value when displaying the cost of term insurance plans.

Disadvantages of Insurance Aggregators 

  • Lack of transparency as to the use of data disclosed
  • Doubts about reliability and objectivity of comparators
  • Inability to gather all contracts over a single platform
  • The complexity involved in the online application process
  • Non-availability of an agency or physical person to contact in case of any queries

Wrapping Up 

With a plethora of options available and with various ways you can invest in a term plan, it is best to turn to a leading insurance company you can trust to secure the future of your family. Make sure to weigh the pros and cons before making any investment decisions. Choosing an aggregator does seem a lucrative option but make sure that you aren’t sacrificing the good options for convenience.

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