You may already know the fact that investing in life insurance is no casual task. You should be weighing different options at all stages of investment, right from choosing a plan, choosing a company, etc. Unfortunately, people do not attach much importance to the method of purchasing life insurance, which is also a contributing factor to its success. In fact, many of you even do not know what different methods are available in purchasing life insurance. So let us start with listing out some of the most common methods.
- Direct purchase
- Purchasing through agents and brokers
- Online purchase
- Other miscellaneous methods of purchase
Each method has its own pros and cons and it is up to you to decide which method is best suited to your needs.
- Purchasing through agents and brokers
Of all these methods, purchasing through agents and brokers might be what are familiar with. This is what many people do, but you should also be aware of other modes of purchase, as your individual needs would be such that a different mode of purchase is best suited to you.
- Direct purchase
For those who have enough time at hand and those who prefer to be in total control of all the transactions, direct purchase is the best choice. You are dealing directly with the insurance company and that would mean that you have to go through many hassles, but you can rest assured that you are not duped by any agent or broker.
- Online purchase
An emerging trend that we see today is that of online purchase. If you are a typical busy person who has no time even to take a deep breath, then you should go for online purchase. This helps you to collect information, compare, make decision, and apply at your most convenient time without the help of any middlemen. This is also a cheaper method compared to other conventional methods of buying life insurance.
- Miscellaneous methods
There are yet other modes of purchase, which are lesser known to most of you. One among them is to buy life insurance through your bank. Besides banks, other national financial institutions are also selling life insurance policies. However, many banks and financial institutions are finding it hard to compete in the market and are slowly losing popularity in this field.
You would also be interested to know how your agent gets remunerated for his services. Very rarely do the insurance company offers a basic salary. Instead, they are paid commissions and incentives. This commission differs according to the insurance company and the type of insurance sold, like whether it is a term life insurance or a whole life insurance. These brokers and agents stand to gain up to 90% commission on whole life insurance policies and around 30% on term life insurance policies during the first year of purchase. However, this rate substantially diminishes from the second year onwards. So now do you get the point why they prefer to sell you whole life insurance?