What Makes an Online Term Plan Affordable?

Factors like the absence of brokerage, lower administrative charges and client profiling make the online term plans cheaper. Let’s take a detailed look.
What Makes an Online Term Plan so Affordable
If you are contemplating to buy a life insurance plan to protect your family, the term plan is undoubtedly at the top of your list. The term plan costs even less when you buy it online. But what makes the online term plans so cheap? There are several reasons behind this. Take a look at this article to know more.

Client profiling

The business of insurance works at risk. Every insurance provider takes a considerable risk by selling an insurance plan. If the policyholder dies, the insurer has to shell out a large amount of money in the form of a claim. So the insurers always look to attract clients who have lower risk profiles.
A person who buys a term plan online is seen as someone who is more tech-savvy and better informed and aware in general. He is also seen as a person who has access to the urban facilities such as the big hospitals. Then, he is understood to be a person with a higher sense of personal hygiene. Such a person is more likely to stay fit or address his health concerns and thereby avoid death to a large extent.
Although accidents can happen at any time, a person with such a profile is perceived to be someone who is less likely to make a claim. The term plans available to him are therefore less expensive than for those working at high-risk profiles.

No brokerage

Another factor that lowers the cost of the online term plans is the absence of the brokerage amount. When you buy an offline term plan, you do so via an insurance agent who charges a fee for helping you out. This fee is known as the brokerage or commissions to the insurance agents who play the role of a middleman. When you buy the plan online, you directly deal with the insurance company and so the brokerage is eliminated. This pulls down the overall costs of the online term plans.
It is important to note here that even without an agent or a broker in the picture, the online term plans are serviced well. Insurance companies encourage you to buy the term plans online. As a result, every insurer has a special customer support team that takes up the role of a broker when you need assistance with your term plan.

Lower Processing Costs

When you buy an offline insurance plan, you are asked to pay some amount as the administrative fees and the processing fees. The insurance company charges you these amounts for various reasons. From something as simple as the paper and filing costs for the application forms to something more complicated like storing the documents carefully and putting the policy in force, you are charged these fees. However, when the term plan is bought online, a majority of the documentation happens online. There is no ‘paperwork’ as such. The need for human intervention is also reduced. The automation and digitalisation of the entire process bring down the insurance company’s administrative charges. This makes way for them to sell the online term plans at lower rates.

To sum it up

When you are planning to purchase a term policy, check out the options available online. You can also compare the various options quickly and conveniently and then make your purchase without any difficulty. The whole world is going to the digital space, and the insurance industry isn’t far behind either. What are you waiting for?