Insurance customers now have a choice: they can go to an agent, or buy their insurance over the phone or on the Internet. Some insurance companies are now offering policies, only available on the web.
Web-only
life insurance policies and annuities can offer major pluses. You can
get coverage cheaper and faster, and you don't have to visit an
insurance agency to buy them. Your choices might be limited, however.
If you require a variety of features on your policy or annuity, you
might be better off going to an agent.
"To sell online, you want a nice, streamlined, simple product."
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Some Internet-only life insurance policies
don't offer much variety in regard to policy features. More complex
life insurance products, such as whole life, variable life, and
variable universal life, require more explanation than some web sites
provide. That’s why many insurers limit their online offerings to
policies that are easily understood.
"A lot of these
products that agents sell have every bell and whistle you can think
of," says Arthur Fliegelman, vice president and senior credit officer
at Moody's Investors Service. "To sell online, you want a nice,
streamlined, simple product."
In addition to life insurance, you can buy annuities that are exclusive to the web.
There
are drawbacks. Some popular features on variable annuities sold through
agents, including long term care riders, guaranteed minimum income
benefits, and bonuses, are not available on web-exclusive annuities.
One advantage to many online annuities is the ability to make an unlimited number of transfers between funds and sub-accounts.
As
more people become Internet savvy and feel comfortable making major
purchases online, web-exclusive insurance might be an attractive
option. Louisiana’s Insurance Commissioner, J. Robert Wooley,
says anyone buying insurance online should make sure they fully
understand the terms of a policy, before buying it. “We’re glad
to see understanding is on the rise,” Wooley says. “However, it’s still
troubling that while two-thirds of adults feel they have the right
amount of insurance, only one-third seem to fully understand what they
have.”
Arthur Fliegelman of Moody's says online insurance
providers have not done enough to give consumers the ability to service
their insurance accounts, which includes paying premiums, changing an
insurance beneficiary, or changing coverage. Fliegelman says online
insurance providers need to make their services user-friendly, if they
want to increase their share of the marketplace.
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