Thinking About Buying Life Insurance Online?
I’m not talking about the companies who have forms or phone numbers on their website, inviting you to request a quote. I’m talking about those companies that claim you will have a life insurance policy locked into place once you hit the submit button – after you entered your payment information. Buying life insurance is not like ordering a pizza; it takes more than an online form to get you the coverage you need.
Life Insurance is not one-size-fits-all.
Some people buy life insurance through the internet just because they don’t know any better. It’s so easy to just fill out that form, enter your payment information and call it a day! There is a reason it’s easy. There may be many exclusions and exceptions to the policy. The policy may be very simplified. You might not be getting what you think you bought.
Ask Yourself These Questions
- There are many insurance companies to choose from. Which one is right for you? Is the answer based on price? Company reputation? Coverage options?
- Different insurance companies will charge different prices for similar coverage. How are you going to compare them to get what’s right for you? Are you really comparing the same policy, or are there slight differences?
- You may need more or less insurance than you think. How do you calculate your needs? What if you don’t get enough? What if you buy too much? You don’t want to be under-covered, but you also don’t want to spend more money than you have to.
- There is often optional, add-on coverage (riders) available that is bundled with the insurance policy. Do you know what these options are? Does the policy online have the riders you need? Does it have riders you don’t want, potentially making the policy more expensive? Can you add these riders on later if you change your mind?
- Do you know that if you make a mistake on your application, your family might not get the money from the insurance policy (the death benefit)? The company might think you lied on purpose to defraud them, so they will refuse to pay out.
- Sometimes it’s better to buy multiple, smaller policies instead of just one larger policy. How do you know if this is a good option for you?
- Sometimes it makes more sense to buy a term life insurance policy while you wait to get approved for a permanent life insurance policy (these often take longer and have a medical exam). Is this the correct plan for you?
- Some applications require a medical exam, and some do not. The ones that do not require an exam often cost more. Is the form giving you an option to take a medical exam? If you are being asked to take an exam, do you know all the steps? How do you prepare for the exam?
- Do you know you risk class? That helps determine how much you will pay for a policy. You need to make sure you are in the right risk class.
The Solution? A Licensed Insurance Agent
A licensed life insurance agent can:
- compare different insurance companies
- give you a quote for the companies that fit you best and not just the ones associated with the quote form
- discuss all of your options to determine your exact financial needs
- discuss all of your add-on coverage options
- determine if you need add-on coverage, such as disability insurance or a chronic illness rider
- help you choose the policy that has the riders you want and avoid the ones that have unnecessary, add-on coverage
- make sure the forms are filled out completely and accurately so your beneficiaries get paid
- advise you on whether one policy or multiple policies make the most sense for you
- help you determine whether you should bundle a term life insurance policy with a permanent one, or even get one before the other
- walk you through the steps of a medical exam to help you get the best rate possible
- correctly determine which risk class you are in – and this might depend on each insurance company
Bait and Switch
Many times, those online, quote forms are a type of bait-and-switch. You fill out the form. The form gives you an actual quote with the insurance company’s name, policy type, and all the rest of the details – and it sounds like a great price – a good discount.
Then you are told an agent will be contacting you to finalize the purchase. The agent contacts you, and you learn the insurance costs much, much more.
The agent is getting you the “real” quote. The form that quotes a cheap price was just to draw you in.
Trust the agent, not the online quote.
It Might Make Sense If
There are a few instances where buying online might make sense (although you should still speak with an agent):
- You only need a very small amount of life insurance.
- You only want term life insurance (in a small amount).
- You need life insurance immediately (a term policy in small amount with higher payments), for example in a divorce decree or to take out a small business loan.
Don’t Do It Alone
If you decide you want to buy a policy online, don’t do it alone. Call the insurance agency’s customer service phone number to make sure you are going through all the steps correctly. The last thing you want to do is buy the wrong policy.
An online quote might be a good place to start, but speak with a licensed agent before you buy.
Asurea offers Life Insurance, Mortgage Protection Life Insurance, Medicare Supplements, Final Expense Insurance, Disability Insurance, Retirement Planning products and more. To find out more, click on the ‘Get A Quote’ button below. Want to have articles just like this delivered to your email? Just enter your email address below and click ‘Subscribe.’
This information is provided for general consumer educational purposes and is not intended to provide legal, tax or investment advice.