Should You Buy Life Insurance Online?
Life insurance is an important part of everyone’s financial planning tool belt. It serves as protection for your family and dependents should you pass away.
For many people, buying life insurance can be a difficult and annoying process. Enough so that they simply don’t apply for coverage, even if they could significantly benefit from one. One way to make shopping for life insurance easier is to apply for coverage online, but should you?
Why Buy Life Insurance Online?
Nearly eight out of 10 U.S. consumers shop online, and over half have purchased something from their mobile phone. Consumer shopping behavior is changing, and just like retailers, the insurance industry is adapting to meet the needs of their customers.
Today, 45% of consumers research life insurance online but still prefer purchase with an agent or financial advisor, according to a study by LIMRA and Life Happens. However, more people are interested in buying life insurance online. The same study reports 29% of consumers say they would research and buy their life insurance entirely online, up 7 points since 2016. And Bestow’s Coverage Gap survey found that only 14% of Americans want to research and purchase life insurance entirely through an agent.
There are a number of reasons why people are choosing to buy life insurance online rather than through an agent.
While the traditional life insurance application process can take anywhere from weeks to several months, buying term life insurance online can take as little as 5 minutes. This is a great option for business owners who have applied for SBA loans and need term life insurance instantly as collateral, as well as parents who needed coverage yesterday and are short on time.
You can apply for coverage at home or on your device, on your own time, no agent required. This is great for the 43% of Americans who stated having to work with an agent has contributed to their not having a life insurance policy. There are no appointments to meet with your life insurance agent or schedule a medical exam.
But shopping for coverage online doesn’t have to feel so alone. There are often licensed life insurance agents available to help answer questions or provide guidance.
Bestow’s Customer Care Advisors work commission-free and are available by chat, email, or phone.
There’s no medical exam.
This can vary from company to company, but in many cases, you can buy coverage online instantly without a medical exam. More efficient processes, like accelerated and algorithmic underwriting, use data and technology to determine how risky you are to insure, as well as how much you should pay for coverage.
Some digital insurance companies may advertise “no medical exam” but request a medical exam after undergoing underwriting. Others may allow you to start the application process online but not purchase. A bit of research can help you figure out what kind of online insurance company or agency you’re working with and whether they truly offer no medical exam life insurance.
Term life policies have a variety of terms to meet your needs. You can find anything from a 2-year policy to keep you covered while in graduate school or traveling the world, to a 30-year policy for your mortgage, and options in between. And if you need to cancel or add more coverage, you can do that from the comfort of your home, too.
Accelerated and algorithmic underwriting uses data to determine how risky you are to insure, as well as how much you should pay for coverage. These rates are comparable to traditional term life policies that use full medical underwriting (with medical exams, lab tests, attending physician’s statements, etc.).
When Shouldn’t You Buy Life Insurance Online?
If you’re in good health, you’re likely a great candidate to purchase life insurance online. However, there are some exceptions.
You’ve had some health problems.
A medical exam isn’t required, but insurers are still looking at your health. Your healthcare data can indicate whether you’ve had any past or current medical problems. If you have a serious health condition, you may get a much higher rate than anticipated or not be approved for coverage at all. In that case, a licensed life insurance agent or broker can help you find an insurance company or other life insurance product.
You need a lot of coverage.
If you’re shopping for a term life policy with a death benefit in the millions, you may have a hard time finding a company or agency that offers high amounts of coverage without a medical exam. However, if you already have existing coverage and would like to purchase more (i.e. buy an additional policy), you may still be eligible to buy online.
You want different life insurance options.
If you’re shopping for life insurance online, you’re likely looking at term life insurance. Many financial experts recommend term life over other types because of its affordability and simplicity. However, sometimes you have complicated financial needs so a different product, like whole life insurance is a better fit. If so, you should meet with a licensed agent or financial advisor who can help you assess what you might need.
You’ve been declined for coverage in the past.
If you’ve been unable to purchase term life insurance coverage previously, you may need to look into alternatives. A licensed agent or broker can point you to some options based on your circumstances.
Is Buying Life Insurance Online Safe?
Many people are, understandably, concerned about using the internet to do something as important as purchase life insurance. How can you feel confident that you aren’t going to be scammed when online fraud is so common? And how do you know if a company has taken steps to prevent your personal information from being hacked?
Something that you can look at when buying life insurance online is how the website is protected. For example, on Google Chrome you’ll see a lock pad icon in your address bar. A closed lock means your connection is secure and the website is safe to use; other symbols mean the connection is insecure or even dangerous. Clicking on the lock will let you view information about the website’s security certificates and cookies. Websites will often display their certificates in the footer, as well.
Don’t be afraid to do some research. If you’ve found an online insurer that you aren’t familiar with, use a search engine to look up the company for bad reviews or potential scams. You should also look up an insurance company’s financial rating to make sure they’ll be around to pay claims in the future.
Of course, there are also some best practices you can follow to protect your own data, like using strong passwords.
Although buying life insurance online isn’t for everyone, it is a great option for people who want term life coverage instantly and prefer to research and purchase on their own time. But if you need a little help, work with a company with great customer service and licensed agents who will help you make the right decision for you and your loved ones.