When not to take online route for buying financial products
When buying a financial product sometimes you may want to look beyond the ease of transaction and low cost and taking the traditional offline route may seem wiser.
Going online is the solution to most of your needs today. Be it shopping for electronics goods or clothes or books, ordering food, calling a cab, investing, buying insurance, there is an online option available.
It’s the ease of transacting while on the go that has made individuals take the online route effortlessly. It is especially recommended in case of financial products as taking the online route also has a cost advantage.
However, when buying a financial product sometimes you may want to look beyond the ease of transaction and low cost. And taking the traditional offline route may seem wiser.
For instance, while buying online may seem easy and cheap, you may find it difficult to choose a product. Even if you go through an aggregation site, you will be able to get a short-list of products based on any one parameter --- like interest rate in case of loan products and premiums in case of insurance products. And this may not be helpful for at least those who are looking for the first time buyers of a financial product. Or, even for those who are completely at sea when it comes to financial products.
Therefore, it is better to take the traditional route. One can go to an insurance company or bank or mutual fund house, as the case may be, directly, define their needs, understand the products available and accordingly choose the right product that suits them best.
The other option could be intermediaries like agents / advisors and brokers. Yes, insurance and mutual fund agents have given you enough reasons to revile them because they often sell policies or new fund offers to suit their own interests. But before you decide against them, you need to understand that agents can also be helpful.
For first time buyers or those who can’t decide between various products, agents can take you through the policy features and rules and help you take an informed decision if probed well.
“You may find a variety to choose from online. But you may not be able to find all the policy details in the brochure. Finer details in the policy document comes after the policy has been bought and not in the policy brochures available online -- for instance, the type of jaundice that can be covered or the cap on the cost of say cataract treatment,” says Divya Gandhi, Head - General Insurance & Prinicipal Officer at Emkay Global Financial Services. Same is the case with mutual funds.
Taking the offline route is also suggested if you suffer from a medical condition - congenital, pre-existing or any other uncommon medical disorder, says M Ravichandran, president – insurance at Tata AIG General Insurance. Such policy buyers are less likely to find a cover online. Hence, such individuals should go through an insurance company or an agent after a thorough medical test.
Same is the case with senior citizens; they can buy a health plan only after a medical test. Hence, they won't find any product online once they punch in their age, as senior citizens entail high risk for insurers.
Also, if you are looking to buy a bigger health cover of more than Rs 10 lakh, most general insurers don’t offer one. Some offer a sum insured of only up to Rs 5 lakh online. The standalone health insurers offer covers of Rs 50 lakh to Rs 1 crore online.
Sanjay Datta, chief – underwriting and claims at ICICI Lombard says, "If you are looking to buy a specific plan or one with some specific feature(s) then you may not find an option online. For instance, you have a family history of diabetes and hence you want to have a cover for it, or if you want a combination of health and home insurance. Taking the online route is best suited for those who are looking to buy a generic plan or a standard health plan." Additionally, he says, many times policies are customized as per the needs of a buyer. That too, cannot be done for online buyers. Say you want to insure your vintage car or a rare art piece at home.
Some feel as insurance is a service contract and so a plan bought offline has an edge over its online counterpart. “Raising a claim is easier with as an intermediary can play a vital role, who can take the burden of claim servicing off your head at the time of crisis. In the event of hospitalisation, the insured and / or his family will have to handle the claim procedures if the policy has been bought online,” says Gandhi.
At the same time, you need to be careful about buying offline as well. Do not buy a financial product just because an agent / advisor is suggesting and you can’t buy one online. Discuss the product with someone you can trust and who had a fair knowledge of the product before you buy. Check antecedents of the agent and ask for referrals.