Beware of Insurance Comparison portals in India

Why Insurance Comparison portals in India request you enter data? Why they always insist you buy a particular product? Have you thought on this? Let us see the reasons behind this.

Insurance Comparison portals in India

Many of us when decided to buy term life insurance, health insurance or car insurance, we want to Google it about the product. Because we want some positive signals towards our buying. Therefore, we Google and land on few Insurance Comparison portals in India.

Suddenly, before displaying their data, these Insurance Comparison portals in India request you to share your personal data like mobile phone number and email ids (in some cases even the city where you are from).

We are at free flow in sharing our personal data. Because we know they just show us product comparison, but they are never going to sell anything to us. Therefore, what is the fear in sharing the personal information?

However, the reality is something different. They act exactly like your Life, Health, or General Insurance AGENTS. Before proving my points, let us see what regulator says about these Insurance Comparison portals in India.

Such Insurance Comparison portals in India are called WEB AGGREGATORS. This means portals, which give you a comparison list of products based on your inputs. It is easy for buyer to short list when he saw the different comparison.

First, let us see the revenue model of these Insurance Comparison portals in India approved by IRDA. These are the points, which are mentioned in Insurance Web Aggregators Regulations 2016. Highlights of these are as below.

# No leads means no earning.

Yes, if these Insurance Comparison portals in India provide insurance leads to insurance companies, then they will not earn any commission or earnings. Therefore, the rationale behind data collection is to make sure you buy the product.

# Leads converted to sales means earning of commission.

Once, these Insurance Comparison portals in India provide leads to insurance companies and such customer buy the product, then these web aggregators earn the commission.

Note that, the commission may be in endowment plans, ULIPs, term life insurance, health insurance, or car insurance. Therefore, never be in the wrong belief that ONLINE insurance or products means you are SAVING commission of the agents.

There is still a commission structure included in premium for online plans also. Because insurance companies have to pay commission to these web aggregators.

The commission structure is as per the remuneration applicable to insurance intermediaries. Hence, the commission is equal to a typical insurance agent.

# Insurance Comparison portals in India collect fees from insurance companies to show the products

You may not aware of such earning module of these web aggregators. But the reality is something different. These Insurance Comparison portals in India are allowed to collect a maximum of Rs.50,000 per year and per product to be displayed on their website.

Therefore, it clearly shows that such we aggregators will not display you the products which are available in India. But they display you the products for which they get the fee for displaying the products. In such a situation, how we assume that we shortlisted the product which is the BEST in the Indian market?

Few best products may not be in their list because the insurance companies may not agree to pay the fee for displaying on these web aggregators portals.

# They are allowed for telemarketing

To close the sales, they are allowed to call you, send SMS or email you. Hence, this is all considered as “distance marketing activities” by IRDA.

With such move, what is the difference between a typical insurance agents to these web aggregators?

# Insurance companies pays for after sales service

Insurance companies pay service charges to provide the service for those policies, which are sold through web aggregators. Hence, here too there is nothing called free service.

I am not sure why such expenses to be payable by insurance companies when these web aggregators earning the commission as per insurance intermediaries.

Even though there are some strict rules to abide the laws of the insurance industry, but I feel the real motive of providing an unbiased comparison is lost. Because these web aggregators purely act like an agent. In such a situation, how we can expect unbiased comparison?

Hence, next time when you Google for buying any insurance product, beware that you are interacting with an AGENT but not a website which only providing you the comparison of product.

When other financial products are available without these web aggregators, then why IRDA provided such platforms for selling insurance products? For example, in the case of mutual funds, there are many such product rating and comparison portals, which are generating their revenue based on the quality content they provide.

Why such a special status for web aggregators? In what way they help the buyers in short listing the unbiased product.

60 Comments

  1. HI BASU
    IS IT BETTER TO GO IN LIMITED MODE LIKE PAY TILL 60 OR IN REGULAR MODE UPTO THE AGE OF 80

    Reply
    • Dear Jai,
      Make sure you pay on a yearly basis up to the policy period.

      Reply
  2. Hi Basavaraj,

    I red whole article, you shared good thoughts. I am searching for term plan from last 6months, every time checking and thought to buy immediately but my main concern is, i am comparing too much and getting confusion.

    Can you please help me out to buy term plan with out more explanation only sweet & short. why i am asking like this if I compare or read more i wont get conclusion.

    Reply
    • Dear Ram,
      All insurance companies are EQUALLY GOOD AND BAD. Hence, don’t waste your time in research. Go with the company which comforts to you and premium affordable. But disclose the facts properly.

      Reply
  3. Hello Sir

    In IRDA website some online providers are listed as ‘online brokers’ for example Cover Fox whereas others as ‘web aggregators’ for example MintWise. I heard brokers are mandated to provide after sales service but not aggregators.

    Can you please throw some more light on the differences between the two?
    If we have to go for one of them (for ease of comparison and selection) which one we should prefer?

    Regards
    Anshuman

    Reply
    • Dear Anshuman,
      Go with both of those. But the decision must not be based on their influence but based on your requirement.

      Reply
  4. Hi Basu,

    Very good article

    I am searching the reason in google that why these so called un biased web aggregator do not show plan for all companies.

    Some time ago my relative joined Tata AIA or AIG and try to sell me the policy that the first time i encounter that web aggregator do not show plan for it

    Now with health plan i found as per my knowledge that Royal sundharam plan is good But listed only on 2 website
    SBI general listed on only 1 aggregator i.e turtle mint.

    Bharti AXA Health (9 month maternity waiting) missing one
    Universal Sompo
    ICICI
    MAx Bupa
    bajaj allanz is also missing from some

    Only star health , Cigna ttk & religare health are available to all

    Also i found that they show settlement ratio for the year they want not the latest one.

    Final thing that stay away from them do not attain there call , read policy working ur self and decide.

    Reply
    • Pankaj-You took an informed and conscious decision. I support it.

      Reply
  5. Good article. I hv experienced this. But lucky not fall in their trap.i want to but A ulip. Can u guide me?

    Reply
      • Bcos 1. they r low cost if but them online . 2. Have the facility to locate our assests without any cost from one plan to another inside A ulip(according to marketed conditions). 3. I think they can fetch good returns in long term(12-15 years) bcos mortality charge get away in long run and we r only left with fund management charge and also v can save tax on investment and most important, returns r tax free. 4. I don’t want elss bcos every monthly investment gets locked for another 3 yrs. (Ulip is better where overall lock in period is 5 yrs. ). I don’t need A term plan too.
        I want to invest in one scheme of each of mutual fund( for growth) and ulip(basically for tax rebate+growth).
        Don’t u think new age ulips r A good choice for future despite their dark past? Most Mutual fund advisors r unfair regarding ulips. I need ur unbiased advice so that i could rightly go ahead.

        Reply
        • Hi Sandeep..
          1. I think though charges are reduced in ULIPs still they are costlier than mutual funds.
          2. ULIPs do provide option to switch one plan to other plan accordingly to market conditions but question is who can predict the market right?
          3. No doubt mortality charges will be reducing over the period of time but please note that the investment made at the beginning of the period give compounding effect.
          4. Considering your investment horizon of 12-15 years as per pt.3 lock in period of 3 years should not bother you. Also if you are saying you dont need term plan in that either no one is dependent on you OR there is some confusion regarding term plan
          Overall what I most like about mutual funds is FLEXIBILITY which ULIPs can not provide. If my fund selection is incorrect any time I can stop my investments and can select a new fund. If want to increase/decrease my investment per month I can increase/decrease it.

          Reply
          • Vikrant-He is unable to understand the greatest freedom of Mutual Funds-Liquidity and Changing the Funds as per your wish. Also, I think he is not understood the importance of these two at all. His only concern is Tax REBATE.

            Reply
            • Agree with you sir. Investment should be linked with goals.

              Reply
          • Hi Vikrant
            Thanx for reply and valuable time u provide addressing my concerns .

            Reply
        • Sandeep-You are staying away from ELSS because lock-in is 3 years but ready for 5 years lock-in product. Switching is allowed within a ULIP. But what if all funds not perform managed by that fund manager? You have no choice but to continue. Regarding term insurance, it is left with you. However, if your intention is to invest for TAX REBATE, then you have to change your mentality. Identify the goal, asset class and product and finally when choosing the product look for tax-efficient. However, you are doing the reverse. ULIP is like your marriage with that product. If you are ready to suffer any bad returns, then go ahead and INVEST.

          Reply
          • Hi Basu
            Thankyou for addressing my concerns regarding ulips. I like ur point “what will v do if the funds won’t perfom well in ulips”. And finally v will be in trouble.
            I hv some queries and concerns regarding investment in mutual funds . Can u help me for making my first investment in M.Fs.? Can i hv ur email address for the same?

            Reply
              • Hi Basu. I appreciate ur commitments
                for readers. I m 33 yrs old working in govt. Sector. Only two months ago i started reading about mutual funds. Recently i came in touch with an online distributor cum advisory platform called finedge. After talking with them on phone, they recommend me franklin high growth companies regular plan. (I was searching for franklin prima plus plan on company’s site,i also asked them for A distributor and company recommend finedge.). They interact with me nicely and recommend this fund for my 10 yrs time horizon. They also told me that they will help and guide me at every moment in future at A nominal fee of Rs. 300/yr. They also told me that if i m not get satisfied with their help then no need to pay advisory fee but they will continue to help me regarding my investment. One thing i like about them was that talked in a simple and frank manner. They also told me that i can go in a direct plan if i could manage my m.f. account on my own. They r sending me some papers for kyc purpose through registered post and also asked me to send a crossed cheque with another filled amount cheque which i would i like to invest along with filled forms which they r sending me. I hv no problem with a regular plan bcos i m new to this field and needs some expert’s help for management at this initial stage. I want to start A sip of Rs 2000/month in this plan. Also i would likely to start some more sip in future on my own(directly)only after i would get some expertise in this field. Is this my right approach towards investment or m i going in a trap like policybazaar type intermidiatry. What will happen if i found in future that there r some hidden charges which they r not telling me right now or this is not possible in mutual funds as there r some hidden charges in insurance sector which v only could know after getting trapped. Although, they told me clearly that if i go with a direct plan then my nav will be of Rs. 36(approx.) and if i go with them(regular plan) then nav will be 34(approx)in this plan, hardly a difference of 1-1.25% in total earnings. I hv no problem over this bcos my intention is to learn at this stage. Are my concerns and doubts baseless? What will happen if i found other face of the coin in future and options to come out? Should i go with them or not? May u please get me out of this dilemma bcos i think u r among
                a few peoplewho spend their valuable time and energy for the benefit of others!

                Reply
                • Sandeep-I am not sure about that middlemen. However, if your concern is their hidden charges, then the only way is to cross-check the charges they levy on you regularly.

                  Reply
              • Wow you can really influence people…great..You changed my mind too, of buying ULIPs…great blog you have ….kudos.,

                Reply
  6. Really nice and helpful article. ..
    I am also getting frequent calls from policy bazaar , as I had once or twice checked comparisons of policies.
    But what one should do …. ? Shall he get customer care number of different companies and enquire them about their products ?

    Reply
    • Samadhan-Better to find the platform where they not ask your personal details or knock respective insurance companies.

      Reply
  7. Basav ji..

    Could you please refer n review below policy and share your comments, opinion, and recommendations for it. Plz…

    Aditya Birla Life Insurance Guaranteed Milestone Plan.

    Reply
      • Ok. Thank You….

        Reply
    • The role of IRDA is also doubtful, why the allow such bias comparision of portal? Why the does not put standard Insurace premium of different Insurance Companies?

      Reply
      • Pathak-Insurance companies are in business but not for social cause. Hence, each insurance company set its terms and profitability margin. Based on that the premium is fixed. How can you say that same product of different brand of the same price? Is it possible when you purchase the grocery?

        Reply
  8. Hi,

    Buying directly through these aggregator portals is fine OR after finalising the insurance company, I should buy from the Company’s portal only?

    Reply
  9. which is best super to up plan avilable for family?

    Reply
  10. Nice article Mr. Basu.
    Recently I came across such incident. One of my friend told me that he bought a term insurance of ‘XYZ’ company. I replied, ” Why did not you bought the term insurance of ‘ABC’ company? Its cheaper than XYZ.” He told that he had inquired through web aggregator and XYZ was the cheaper one among the suggested list. Then I told him to check by visiting to ABC website and he was surprised to see the facts. He called and complained to web aggregator and the response was ‘ABC’ is not in their list.

    Reply
    • Vikrant-Thanks for sharing your real experience. Hope buyers will take your experience into account.

      Reply
  11. Would like to buy a pure term plan. Can you suggest better one between Icici or hdfc?

    Reply
  12. Hi All,

    From all the above comments, I could say this is a wonderful “eye opening & mind opening” post which brings awareness to many online insurance buyers., which also revealed few of the hidden business strategies & marketing techniques.

    ~ SuReSh GaJaM.
    Insurance Analyst

    Reply
  13. Dear Basavaraj,
    very much thank you for such eye opening fact.
    some of my frinds (3) left family without any security(money in hand). although we managed to help the family. I do not want to put my family in such bad situation. I need an insurrance one time deposit premium so that after misshappening my family get a big amount from ins company. no monthly installment is required.
    please sugest the plan.
    I am in jaipur, rajasthan
    Devesh Sharma
    921444444446

    Reply
  14. Hello Basu,

    But kindly clarify – the premium one pays is the same – regardless if you buy from a comparison portal or direct from company website. In this case, whats wrong in buying from a comparison portal ? At the very least, you will get few service related calls from time to time, also they help during porting of the policy etc. ?

    From an end consumers point of view, we anyway have no choice or SAVINGS when buying direct from company website.

    Reply
    • Manish-But how can you rely on these portals that they suggest YOUR BEST rather than THEIR BEST? Do you think conflict of interest will be there?

      Reply
      • Thanks. So do you thing this is a better approach: Research the policy if it meets your terms and conditions and fulfills all your expectations. Then, go to the comparison portal and buy from the portal and not from the company website.

        (Assumption: that the policy which meets the expectations is listed in the comparison portal! For example, the policy I was interested in was not ‘a partner’ of the comparison portal hence they could not help me make the purchase. They were pushing me only the policy from a particular company!)

        Reply
        • Manish-Yes, what I am pointing is never buy or invest relying on anyone’s research. Understand why you have to buy, whether it is really a need for you or not. Then go ahead. I am not aware to what extent they give you the service in future.

          Reply
  15. bcoz whole life insurance business model is basically a M-L-M scheme

    Reply
  16. I agree with your views espeically about telemarketing. They do call for customers who browse their site giving mobile and email ID information and force to take products which are useless. I personally experienced this when I did this for couple of insurance comparison portals

    Reply
  17. Thanks Basu
    Again for such awareness which I hope hardly peoples know about all those hidden initiative ness when we uses online portals by thinking that we r saving our few penny from so this so called agents .. …..

    Reply
  18. Yes basu I totally agree with you boss.These websites uses search engine optimization (SEO) so that when any person types any product name or in general for insurance like online term insurance we are firstly landing on this sites. And whole selling startes. When I was searching on line term insurance and I landed on their ……but I simlpy told them I am just using your site to make comparison and will buy from direct comp. Then no call or SMS or email I recieved

    Reply
    • Jatinder-Thanks for sharing your views and endorsing my points.

      Reply
  19. Hi Basu

    The Article explained the problem statement well but I feel it does not conclude with some solution and way forward for the customer.

    Can you please suggest some solution for a person like me who is looking for a Term Insurance product?

    Thanks

    Reply
    • Mohit-Solution is to understand each wordings of the products. Compare on your own or use these portals just for name sake. But final decision will be based on your own requirement.

      Reply
  20. Can u advise, how do one really find & compare best products

    Reply
    • Kishor-When we say life insurance, the only product you can buy is term insurance, which I think not so complicated. Regarding, health and other types of insurance, you MUST do your own homework instead of relying on such portals.

      Reply
  21. Thanks Basu for sharing this must read article. This is a very informative post.

    Reply

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