Traditional & Web-based Insurance Options
Finding the Right Insurance Company for You
2/8/2021
Comparing Insurance Types
Should I Choose a Traditional or Web-Based Insurance Company?
Finding valuable life and health insurance policies is more important than ever before. With healthcare costs reaching all-time highs for many people, having a robust, reliable policy in place can have a tremendous impact on both your personal and financial well-being. Furthermore, in the midst of a very turbulent economy, quality life insurance can help ensure that your loved ones will be financially secure, no matter what the future has in store.
Of course, life and health insurance are really just the tip of the “insurance iceberg.” Other types of insurance, including dental insurance, vision insurance, and disability insurance, can help offer even greater protection. It is crucial that we all take some time and think about our insurance needs.
Once you decide on the types of insurance you hope to purchase, the next thing you’ll need to determine is where will you plan on purchasing your insurance policy from? According to the National Association of Insurance Commissioners (NAIC), there are nearly 6,000 insurance companies in the United States alone.
In an era where insurance companies are abundant, it will be crucial to compare your options and select a company that truly fits your needs. You might begin your search by deciding whether a traditional insurance company or web-based insurance company makes the most sense for you. Below, we will discuss the differences between traditional and web-based insurance companies, along with the pros and cons of each type of company.
Traditional versus Web-Based Insurance Companies
These days, almost every insurance company will have an established online presence and, in many cases, you can apply for a personal insurance policy partially or even entirely online. However, web-based insurance companies are structurally different.
Web-based insurance companies typically do not have an in-person office. All initial interactions will begin entirely online. In most cases, people who purchased their insurance online will not have their policy connected to a specific agent, rather, they will simply contact the company as a whole in the event they need support.
The profit structures for web-based insurance companies is also usually different. Though these companies do, in fact, make money the traditional way, significant portions of their income are often derived from selling user information. In this sense, many web-based insurance companies are not structured like the companies you have seen in the past but are structured more like technology companies.
Web-based insurance companies are new, adaptable, and have certainly disrupted the international insurance industry as a whole. But regardless whether you choose to go the web-based or traditional insurance route, your decision will inevitably have some trade-offs.
Benefits of Choosing a Web-Based Insurance Company
One of the primary growth forces in the web-based insurance industry is that, due to the fact that there is almost limitless information available online, these companies make it easy to manually compare multiple different options. People who are interested in purchasing insurance policies from web-based insurance companies—whether life insurance, health insurance, or anything else—can quickly compare multiple different possible choices and find a deal that works for them.
There are also insurance aggregators that make it easy to compare traditional options as well, but the convenience of web-based insurance should not be overlooked. Additionally, these companies tend to pride themselves on pricing and transparency. Policy details are much more up front, though it will still be critical for all buyers to read the fine print, even if the policy you are purchasing seems rather simple at its face.
Lastly, many people claim that web-based insurance companies are relatively cheaper. Because these companies operate with a much simpler business structure with limited overhead, they can theoretically cut out certain costs and pass the savings on to the policyholders. However, when comparing identical policies between these firms, the ability to save is not always so clear. Be sure to compare multiple different insurance providers before making any final decisions.
Benefits of Choosing a Traditional Insurance Company
Traditional insurance companies have, naturally, existed for much longer than web-based insurance companies. Some of these companies have been operating for more than a century and typically have access to considerably deeper resources and connections. In some cases, such as with health insurance, this means it might be much easier to find a healthcare provider that is actually within your network.
Traditional insurance companies typically have much more extensive infrastructure, such as on-the-ground agents and a 24/7 customer support line. If and when you do need to access your policy, these resources can make a major difference. Customers are also typically much more confident—and much more likely to have their questions answered—when they are able to speak directly with an insurance agent.
It is also important to note that, typically, traditional insurance companies can usually offer much more diverse and customizable insurance packages. For example, with life, health, vision, dental, and disability insurance, it is quite common to find all of these policies all being offered by a single traditional provider. Web-based companies, on the other hand, are usually much more limited in scope.
Additionally, a typical draw to web-based insurance companies is ease of access and user tools like apps, interactive web pages, and even web-based options for receiving care. However, the web-based companies are not alone in their use of web-based tools. As with most industries, traditional insurance has adapted to the web-based age with convenient tools like electronic billing, phone apps, and customized user experiences. What was once considered cutting edge and reserved for web-based insurance companies has become standard practice across the industry.
Bottom Line: Picking the Company that’s Right for You
Web-based insurance companies have rocked the insurance world and, in some ways, have caused their traditional competitors to change for the better. However, the web-based insurance industry is still fledgling and, for many people, delivers a less than ideal customer experience. While you should undoubtedly compare both types of policies before making any commitments, it is clear why traditional companies are still responsible for the vast majority of new policies.