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Buying life insurance online is quick way to get coverage

Life insurance is no longer about filling out lengthy forms and going through medical exams. Now, an increasing number of life insurers are letting consumers sign up for life insurance online. 

Life insurance companies are hoping these online options interest 20- and 30-somethings to buy policies. 

"People under 30 are more tech-savvy than any other age group, offering the ability to get life insurance online without having to speak to anyone and with a faster process than traditional life insurance applications is definitely attractive to them," said Shauna Visconti, sales director and life insurance agent at Leap Life. "Life insurance only costs more the older you are, so obtaining it under 30 ensures you secure the lowest possible rate and thus saves you money in the future. Being proactive now will pay off in the long run."

Millennials going through life changes like buying a home, getting married and having children are increasingly looking for ways to plan for the future. That planning includes life insurance. But how can insurance companies connect with 20- and 30-somethings? 

Matt Myers from Haven Life Insurance Agency, an online life insurance agency, explained that companies need to "meet them where they are and make it as simple as possible to check it off their to-do list."

"Digital natives to their core, individuals in their 20s and 30s expect their products and services to be easily accessible online," said Myers. "When we set out to create Haven Life about five years ago, there were no options for purchasing medically underwritten term life insurance (one of the most affordable types) online."

 

Technology leads to faster results

Visconti estimated that roughly 75% of customers who come to Leaplife.com start an application online instead of through the phone. 

Today, buying life insurance is not only faster because you can do it online. The technology lets insurers pull accurate medical information to allow them to assess an applicant’s medical history. This history includes a prescription database check, motor vehicle report, a Medical Information Bureau (MIB) report and other levels of public credit and background checks.

"In concert with our parent company and issuer of the Haven term policy MassMutual, we have created innovative technology for application taking and underwriting that enables us to see a more accurate and holistic picture of an applicant's health. When an individual submits an application, we're able to analyze that information in real-time and pair it with industry-standard, third-party data like prescription history and motor vehicle records to provide an instant decision on coverage eligibility,” Myers said. 

In some cases, you may qualify for instant coverage, which allows you to skip a medical exam altogether. Most applicants, however, end up needing to take an exam. 

 

Why buy life insurance online?

The Internet offer convenience. There are several reasons for buying insurance online.

"You have the possibility of instant approval and getting your policy approved in as little as 10 minutes, as opposed to the old style of application approval taking four to six weeks. If you are not instantly approved, you are still in an accelerated underwriting process in which approvals take generally less than two weeks,” Visconti said. 

The Internet also lets you shop and compare policies easier. You don’t have to meet with an insurance agent and compare multiple options. 

"The Internet is helping democratize financial literacy in a vital way," said Myers. "Increasingly, we are all getting access to the information and tools necessary to educate ourselves, save more, invest wisely and purchase the right products to protect our families and wealth. For people who prefer doing research themselves and managing their finances in a self-directed way, applying for and buying life insurance online is simple, transparent and incredibly convenient."

The online process is easier. The applicant supplies basic information like age, occupation, health, personal and family history. The insurer then reviews the application, often in real-time, and gives back an instant decision on eligibility.

"If approved, you can start coverage that day," said Myers, adding that the person may need to take a medical exam to finalize pricing and coverage. 

Not everyone is eligible to get life insurance online though. People with a health issue may not qualify for online life insurance. Instead, an insurer will want more health information about you and request a medical exam. 

 

How much does term life insurance cost?

Term life insurance covers you for a period of time. It’s often 10, 20 or 30 years. The longer the policy, the more you’ll have to pay. 

The same goes for age. If you buy a 30-year term life insurance policy at 25, you’ll pay much less than if you bought the same policy at 45. 

Why? Insurance companies base rates on risk. A person who is 25 is less likely to die in 30 years than a person who’s 45. 

Let’s take a look at the average term life insurance rates for nonsmokers who are considered “premium plus” health, which is the healthiest designation. 

 

Average annual term life insurance costs for $250,000 policy

Age and gender10-year policy20-year policy30-year policy
20-year-old female$177$216$282
20-year-old male$209$261$356
25-year-old female$176$217$288
25-year-old male$206$257$356
30-year-old female$180$230$316
30-year-old male$208$267$383
35-year-old female$190$260$361
35-year-old male$217$295$432
40-year-old female$236$350$491
40-year-old male$273$416$609

 Source: CompuLife, rates for July 2019. Note: These averages for all term life insurance policies -- not just ones purchased online. 

 

Tips for buying life insurance online

As with searching for a new car, booking a vacation package or applying for college loans, there are ways to make applying for life insurance online easier.

First, experts say to be honest and forthcoming with your answers. 

"You can't 'beat the system' by lying," said Visconti. "Life insurance carriers have safeguards in place to prevent that (the background reporting they do for example). Fibbing only slows down the approval process and increases the chances that the rate you were quoted will go up."

There are a few considerations that life insurance shoppers should make when applying for coverage online, according to Haven Life:

  • Make sure you're buying the right policy for your needs
  • Price compare, price compare, price compare
  • Check life insurance company ratings
  • Make sure you're getting the right amount of coverage for you

Buying life insurance online is a quick way to get insured. Answering a handful of questions could result in you getting covered almost immediately. 

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