Life Insurance: Online Only Companies Cheaper?

Buying life insurance online is becoming more popular with people from all walks of life. These companies advertise on television frequently and bring in customers by the droves. They do not have any insurance agents or offices for you to visit. They give you a website address and perhaps a promotional code to go with it. They promise savings because they are "online only" but do they really deliver on these promises. Most of the time, they are a little less expensive than the rest. Let's take a look at "online only" life insurance companies.

Fewer Employees

One big way that these online companies are able to keep costs down is by having fewer employees. Imagine how much money a traditional insurance company spends on their employees. They have costs for payroll, medical coverage, 401k contributions, workman's compensation, paid vacation, and many other benefits. This will usually amount to millions or billions of dollars every year. An online company can eliminate a huge percentage of this money because they only need a few employees. They do not need agents to sell the policies and need fewer employees to process everything since it is done online. The savings in payroll and benefits can be passed on to you as a customer.

Less Overhead

Another way that online life insurance companies can save is with less overhead. When you do all of your business online, you don't need several hundred buildings set up across the country to sell insurance. Most traditional insurance companies set up offices in almost every town in the country. This cost can be avoided by doing business online. They can also save on utilities like water, electric, sewer, and more. All of these savings give them another competitive advantage in the marketplace.

Online Advertising Programs

Doing business online also allows them to take advantage of online advertising. Much of the online advertising can be done cheaper than traditional advertising. You might spend thousands of dollars for a prime television ad and get the same amount of customers that you can get from a cheaper pay-per-click ad. Online advertising allows you to target in on exactly who you want to market to. Traditional forms of advertising are designed to speak to the masses. You will only hit a few of the targets that you are aiming at. They can also make use of online affiliate programs as well. These programs pay affiliates a commission once they bring in a customer. This allows them to save their money until they get results.

Cheaper Is Not Always Better

While "online only" companies might be a little cheaper, that does not mean that you should automatically go with them. Brick-and-mortar life insurance companies have been around for many years and will not go away any time soon. You might get better service from a regular life insurance company than you would from an online company. Just make sure that you do business with a reputable company regardless of who you choose.



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