How To Buy Life Insurance Online – When you think of cutting-edge industries, insurance may not go through your mind. But the industry is fighting its stoic image, and nothing more than when it comes to making it easier to buy life insurance online.
Online sales of life insurance grew even before COVID-19, rising from 21 percent in 2016 to 29 percent in 2020, according to insurance research firm LIMRA, but the pandemic has raised its profile. With face-to-face visits to restricted agencies, and more commerce moving online, even for financial products, insurance companies have been forced to adapt.
Life insurance has faced the biggest disruption, largely due to its reliance on direct medical examinations. But life insurance companies have seized that opportunity with a better online buying process, according to Jaimie Pickles, general manager of insurance at purchasing analytics firm Jornaya.
“The digital experience is really good with life insurance,” Pickles said. Compared to car insurance, especially, the process is simpler, and the price transparency is better.”
However, the online purchase of life insurance is still not ideal, or suitable for all buyers. Here’s what you can expect when buying life insurance online and tips on how to optimize your purchases.
What you need to know before buying life insurance online
Online insurance purchases continue to grow, even as vaccines promise to ease the impact of the pandemic. Here’s an overview of what the experience usually offers now, whether you’re shopping directly with an insurance company or using an independent broker representing multiple insurers.
- Comparative price quotes upfront
Buying insurance online usually starts with filling out information about who you are and the coverage you’re looking for. But when buying car or home insurance online, you’ll usually be served a name, or just a name, only for the recommended options. To view the premium requires a click on the insurance company’s website.
Instead, “life insurance companies are more willing than home and auto companies to give their rates online in a price comparison landscape,” Pickles said. This makes it “much easier to buy life insurance and get a good potential price range.”
- An invitation to share your medical records
In addition to asking you to send them basic identifying information, the insurance broker may ask you for permission to access your medical records and, in turn, disclose them to one or more insurers, with your consent. The publication of such data, from something called the Office of Medical Information (MIB), is becoming more common, in part because it can reduce or even eliminate the need for medical examinations.
Your agent or broker can use the data for pre-qualification, before sending any data to the insurance company. For example, Assaf Henkin, president and chief operating officer of online brokerage Sproutt, said his approach involves “verifying individual records to ensure they are financially and health-qualified.” If they do, he said, he works with “specific partners who go through a due diligence process with us to verify that they trust us when we bring them certain customers.”
In other cases, your prequalification sends data to one or more insurance companies, to seek approval of the maximum amount of coverage and premium quotes for each. Again, this saves you the hassle of doing that, and allows you to benefit from the broker’s or agent’s expertise to know which company is most likely to give you the green light and offer a competitive premium.
- The possible need for a medical exam
The prequalification process for life insurance does not necessarily exclude the eventual need for a medical examination, especially to get the best rate. After a period in which almost no such tests were conducted, direct assessment has resumed, with safeguards in place. For all life insurance conveniences without a test, premiums are often higher than coverage that involves delivery to the full physique.
- A wait for approval
The time it takes to perform and evaluate a medical exam is one of the reasons life insurance may be less instantaneous than other types of insurance. Although the process may be easier when you start online, the process can still take several weeks to complete.
There are also signs of improvement here. “Completing coverage with an operator is never great” in terms of time, Pickles said. “But I think they’re doing a better job of underwriting by providing coverage,” with faster results.
In addition, some insurers may offer short-term term policies that provide coverage while you wait for your application to be approved, says Mark Friedlander, Director of Corporate Communications at the Insurance Information Institute.
How to buy life insurance online
Here are step-by-step tips on how to use the Internet for a life insurance policy.
- Determine your life insurance needs first
The better you feel about how much insurance you need, and what kind and for how long, before you connect, the smoother your experience will be.
“[Prospective policyholders] should really know what they want,” said Elaine Tumicki, LIMRA’s corporate vice president. “If they’ve done their research and know they want to buy a $500,000 term policy, then the online process can fully work for someone like that.”
Friedlander agreed. Do your research and don’t be afraid to contact an insurance consultant or financial advisor before you start the application process.
In the absence of such professionals, or before moving on to one, you can, of course, get help online. A LIMRA 2020 survey found that the majority of life insurance customers do research on the internet before buying, including about a third of respondents who said they went online to the company’s website when researching insurance brands.
You can also use online calculators available through insurance companies and personal finance sites to assess your life insurance needs. However, keep in mind that many of these tools require you to enter your email address or other contact information, so it can result in follow-up communication that can be annoying, especially if you’re just shopping casually. (You can always unsubscribe from the email as needed.)
- Consider using an independent broker.
If you’re ready to buy life insurance online, you’ll have two main alternatives: go to an independent insurance agent or online broker or buy a policy directly from an insurance company, either through your own website or one of your affiliated agents in your area. The choice you choose can be reduced to the extent with which you want to cast your net.
Buying a policy directly through an insurance company can save you time if you’ve done the hard work comparing quotes and have decided on a particular product, perhaps because you already have other insurance with the company. Discounts for grouping your life insurance with other coverage are less common than, say, combining auto and home insurance. But some companies, including American Family, offer such deals.
But just going to a company could, of course, mean you’re paying more than you pay when you buy, and you could also run the risk of not getting a policy, if the company rejects you for medical reasons, for example. If you haven’t compared quotes or quotes, and you don’t know where to start, the broker can give you a broader list of policies to choose from, as well as allow you to get more eligible coverage.
Independent agents and brokers are licensed to sell a variety of insurance products from various companies, while certain insurance companies can only focus on listing their products.
- Fill out the form accurately
When providing personal information, do not withhold any fact and make sure everything is accurate. Otherwise, an application may be rejected or a commitment to future payments.
As for signatures, many insurance companies no longer require “pen and paper” or wet signatures. E-sign, an electronic signature service, allows you to digitally sign documents without having to use a physical paper copy. And electronic signatures are backed by the Electronic Signature Act, which makes them equally legal and legally acceptable.
This is an explanation of what you should know before you buy life insurance online. Hopefully from the description above can give you the knowledge to choose the right insurance with your needs.