Is Buying Life Insurance Online A Good Idea?
September 17, 2018
This post is guest written by our partners at Breathe Life. Live in the moment, plan for your future.
As the life insurance industry has slowly caught up with the changing habits of its clients, more and more providers are now offering faster and more convenient online services.
And that’s a good thing: in the past, buying a policy meant processing over several weeks with paper applications, faxes, and back-and-forth games of phone tag just to find out if you’d been approved. Now people can conveniently search online for the most affordable and dependable options.
Where do I start?
Most of the legwork for certain policies can actually be completed online. The first thing you need to understand is the type of insurance you need, the amount of insurance you need, and the value of the policy. An online platform can speed up the process rather than the long process of researching at home, heading into an office to see a life insurance broker, going through the underwriting process and returning to see the broker. But if you’re anything like me, you probably don’t have time for all that in between work and the kids.
Luckily, buying a great term insurance policy can largely be done online. This is a particularly good idea for younger people just starting families. For those with several financial commitments like a mortgage, and car payments, term insurance will give you the highest possible gain for the best value.
Why should I do it online?
Buying life insurance online can be as fast and simple as anything else one purchases online.
It’s not unheard of for someone applying in-person to wait as much as eight weeks just to find out if they were approved. The speed factor associated with online claims, on the other hand, saves you valuable time. Usually, it only takes about 15 to 20 minutes to complete and submit an application.
While it varies from website to website, many online providers will give applicants an immediate decision about whether they have have been approved, declined or if further information is needed.
If you are having any difficulty, most providers offer a host of online tools available to help you understand your life insurance needs or how much a policy will cost. Providers can also offer real, human customer support over the phone, email and live chat.
Plus, by going online, you’re opening your options up. Online aggregators and agents usually work with more life insurance companies (often 10 or more) instead of just a few that a local agent might work with.
Who should my life insurance be with? Who should underwrite my insurance?
I advise clients to go for a tried-and-true underwriter with a long-term track record. They might be old and boring, but their reputation should be an immediately valued factor in choosing who you go with.
So, while you should save time and energy shopping for life insurance online, it doesn’t always work to buy the cheapest option.
Scale matters in this business. Where you go to get your policy matters. You may get excited about finding a cheaper price, but you could be playing with your future.
How should I prepare?
Doing homework on what exactly you want in your coverage is key before purchasing online. Buyers should have a fair amount of understanding about how life insurance plans work and are able to comprehend and evaluate the different features available in the plans. Make sure you know which type of plan best fits your individual needs.
Typically you’ll also need to provide your personal details (including address) and proof of income may be required.
Since your premium is almost entirely based on your health and lifestyle, you should expect an online agent to ask specific health and lifestyle questions before giving you a quote.
How much life insurance will I need?
While everyone’s situation is different, if you don’t want your family’s life to drastically change, I recommend getting 15 to 20 times your income for one year. It’s conservative, but it’s safe.
Think: a policy for $50,000 or $100,000 would last a family member just one or two years. If you don’t want your family’s life to change, assume that replacing a person’s income and other expenses they will need to pay will be at least a quarter or half a million dollars. But, again, it depends on your family’s income and every family is different.
Dan O’Shaughnessy is the Principal Broker at Breathe Life. There’s no denying it. Everyone deals with difficult financial decisions throughout their lives, and financial institutions make these choices long and hard to navigate. Breathe Life is on a mission to change that. We’re creating an environment where people can find the tools they’re looking for and the advice they need to make smart decisions and find peace of mind.