How To Buy Life Insurance Online
Our phones, iPads, and laptops — they help shorten our never-ending to-do lists. Now, thanks to Amazon Prime, even buying groceries requires only a few screen taps.
Amazon doesn’t sell online life insurance yet, but a lot of online agencies and insurers do. The coverage you need could be a few clicks or taps away.
Let’s look at online life insurance — how to buy it, what kind of coverage to buy, and whether it’s for you.
Why Buy Life Insurance Online?
Life insurance is personal. Your age, health, habits, job, and even your hobbies will influence your eligibility for coverage and the price you’d pay for coverage.
Buying life insurance online may not be for you, especially if you’re in poor health or need a special kind of coverage. If you need a simple term policy and you’re relatively young and healthy, you can probably find the coverage you need online, today.
Or if you need final expense coverage or another policy with a small coverage amount, shopping online should work for you, too.
Shopping online for life insurance has lots of benefits:
Lower Cost Options
Because online coverage tends to be simpler — and because you skip some of the middle steps — your online coverage could be cheaper than buying from an in-person life insurance agent who earns a commission.
Compare Life Insurance Quotes
Shopping online lets you cover more territory in less time. Traditionally, you’d spend days or even weeks making phone calls and meeting with agents. Now, you could compare several life insurance quotes within minutes.
Now you can even shop several life insurance companies with a single application using an online marketplace like Policygenius.
No Face-to-Face Meetings
We’re all busier than ever, and a face-to-face meeting with a life insurance agent could knock out half a day of your productive time. Buying online means you can skip all that legwork.
Less Documentation Required
Most online companies rely on a combination of database information, algorithms, and artificial intelligence to gather your health information. You won’t need to retrieve or upload hospital records or medical evaluations.
Paper applications — they’re disappearing quickly. With an online insurance agency, you can skip the clipboard-and-ink-pen routine. You can also avoid the trip to the post office because you’ll be submitting your application electronically.
No Medical Exam Requirement
Understandably, many of us would rather not undergo a life insurance medical exam. Not only would you have to arrange the exam at home or in your office — which takes time — but you’d have to get blood drawn.
The whole process delays your application by a few weeks. Some insurers don’t require a medical exam. Some still do, however, and you can often save money by taking the exam.
Documents Can Be Easily Uploaded
If your insurer needs more documents, you could upload them instead of mailing them in.
You can usually track the progress of your application from start to finish and entirely online.
Because of all the streamlining, life insurance decisions happen more quickly, often in a matter of days rather than weeks. In some cases, decisions can be rendered in just minutes!
How to Buy Life Insurance Online
Applying for life insurance online resembles the old, face-to-face method. You’ll still complete an application, share details about your life, answer some health questions, and wait for a decision from the company.
But the online process should be simpler and faster — and it could be less expensive.
You can buy online coverage:
- Directly through specific insurance companies or agencies.
- Through an online life insurance marketplace that shares your application with a variety of potential insurers.
Both these avenues work the same way, at least during the first couple steps:
Get Life Insurance Quotes
Whether you’re buying directly from a company, an agency, or through a marketplace, you’ll start by sharing some basic details. You should not provide detailed personal data yet. In this first step, you should tell the provider:
- What type of life insurance you need: Term or permanent coverage for example.
- How much coverage you need: Your amount of coverage will impact price and eligibility.
- Your desired term length: Your term refers to the length of your life insurance coverage. Permanent policies can last the rest of your life.
This information helps providers, agents, or aggregators show you some free quotes. Consider these quotes ballpark estimates for your coverage.
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The Application Process
Until you file a formal application, the company can’t give you an accurate price for your coverage. But if you like a company’s quote, you should take the next step and submit a full application.
Your application will give you a chance to share a more nuanced view of your life. Expect to answer health questions, details about your job and hobbies, whether you smoke or how recently you smoked, and details about your family’s health history.
Some companies may let you skip the life insurance medical exam. These companies can check online medical and pharmaceutical databases. They can check with your state Department of Motor Vehicles about your driving habits. They may even check your credit score.
Other times online companies will require the health exam. This will take time, but the insurer should pay for the exam. Plus, if you’re in top-notch health, the exam can prove it, leading to lower prices.
Aside from an exam, if necessary, this entire application process will take place online.
Wait for a Decision
Your completed application will go through the insurer’s underwriting process. During the underwriting process, your insurer’s algorithms — or its staff members — will assess the risk your policy would present to the insurance company.
By covering you, your insurer risks losing money. If you died within a few years of getting coverage, for example, your company would pay your death benefit. A policy with $2 million in coverage would cost the insurer that $2 million if you died. Plus they’d lose your incoming premiums (plus interest) that you would have paid as a policyholder.
Underwriters assess your risk of dying based on your age, your overall health, your diagnoses, the dangers inherent in your lifestyle, whether you smoke, and your tendency to take risks.
Do you have a risky job such as roofing or logging? You’d be a higher risk. Do you smoke? You’d also be a higher risk. Are you on two heart medications? Higher risk.
Your risk quotient helps determine the amount of your premium payments. (The size of your policy and its term length also makes a huge difference.)
Online underwriting can happen within minutes or within days. If you need a medical exam, your coverage won’t be finalized until the insurer gets your exam results.
Start Making Premium Payments
When you’ve received your decision, and you accept the policy, you’ll start making regular premium payments. Your payments keep your coverage in force. I recommend setting up auto payments out of your checking account to make sure you never forget a payment.
With coverage in place you can know you’ve taken steps to protect your family in case you die, leaving them without your income as they build a new life.
5 Tips for Buying Life Insurance Online
More and more insurers are building interactive online or mobile-based systems to help you buy coverage quickly and seamlessly.
You can make the process go even faster by taking a few extra steps:
Tip 1: Be Thorough
Be as thorough as possible on your application. Leaving out requested information or providing vague answers may save you a few minutes now. But it’ll invite requests for clarification and additional documentation which will take more time later.
Tip 2: Tell the Whole Truth
Be absolutely truthful on your application. If you have a health condition or a risk related habit, like smoking, disclose it on your application.
If you omit these details and the insurance company finds out from third-party sources, your application could be denied.
Worse, if your company found out about the omission after the fact, the claims department could deny paying benefits based on the omission. This would defeat the entire purpose of buying life insurance.
Tip 3: Be Responsive
Once your application has been submitted, stay alert for phone calls and emails from the insurance company. Underwriters often have more questions, even if you completed the application fully.
Sometimes information from public databases can raise questions that you can answer quickly when you’re paying attention. The quicker you respond to requests for explanations, the faster you’ll get a decision from the insurance company.
Tip 4: Have Bank Info Ready
Insurance companies that provide online coverage like to minimize expenses in all facets of their business. Rather than mailing you statements, they’d rather receive your payments online.
This works well for most customers, too. You can set up your payments online and stop thinking about due dates and making on-time payments.
Since life insurance lasts for decades, I recommend sharing your bank account number rather than a credit card which could change every few years.
Either way, have your details ready to enter.
Tip 5: Tell Your Beneficiary
This last tip has more to do with how you use your new policy.
If you died, your beneficiary would need to file a claim to receive your policy’s death benefit. You’ll name your beneficiary during the application process.
When you’ve finalized coverage, be sure to tell your beneficiary about your policy. Record your log-in and password somewhere safe. Or at least find the phone number for the insurance company’s claims department, along with your policy number, to leave in a safe place.
Eventually, the insurer would find and pay your beneficiary. But filing a claim would help your family get your policy’s payout sooner.
Best Online Life Insurance Companies
More and more insurance companies let customers apply for coverage online. But the ability to submit an application online does not, by itself, indicate you’re working with an online company.
Some companies take your information online but then put it through the traditional channels. Others use the Internet as a tool to support underwriting but still, at the end of the day, write policies the way they always have.
The best online life insurance comes from companies and agencies born out of the digital age. They let you apply using intuitive apps or web sites. While you’re entering data, they’re already starting to use the details you’re providing to get a picture of your life.
Then, when you have coverage, the best online life insurance companies let you manage your policy — change beneficiaries, change your mailing address or billing information, or cancel or adapt your coverage — all online and within minutes.
My favorite online life insurance providers include:
Haven Life, a subsidiary of MassMutual, provides instant decisions on coverage applications.
Applicants younger than 45 can usually skip the medical exam. Haven Life offers some of the best term life insurance policies up to $3 million.
- Read our full Haven Life Insurance Review.
Bestow lets you apply for coverage in as little as five minutes. This company provides term life insurance policies with no medical exams or lab tests required.
Policies are available for up to $1 million, with terms ranging from two years to 20 years. However, you can only apply for coverage only up to age 54, and this option won’t be ideal if you have a complex medical history.
- Read our full Bestow Life Insurance Review.
Ladder Life lets you complete the entire life insurance application online, and you get a decision immediately if no medical exam is required.
If you do need an exam — which Ladder usually requires if you’re asking for $1 million or more in coverage — your coverage will remain pending while underwriters wait for your exam results to come in.
Ladder offers term policies ranging from 10 to 30 years in amounts up to $8 million. And Ladder lets you adjust the amount of your coverage based on your current financial needs — even after you’ve finalized your policy.
You could adjust your coverage higher or lower. Ladder offers term policies only, and only up to age 60.
- Read our full Ladder Life Insurance Review.
After only a couple of years in business, Ethos Life Insurance has already made a name for itself. You can get up to $1 million in term coverage within 10 minutes, and your policy will be backed by an industry leader, Assurity Life Insurance.
To buy more than $1 million in term life, you’d need a medical exam. If you’re young and healthy, you can expect to find affordable life insurance on Ethos. Older applicants will have more trouble and will have more limited term lengths.
- Read our full Ethos Life Insurance Review.
Best Life Insurance Marketplaces
Online life insurance marketplaces let you submit one application to multiple insurers at one time.
Often called aggregators, marketplaces partner with multiple insurers to get you covered. Completing an application can generate quotes from several companies.
Then you can decide whether to follow through with an application.
Popular online life insurance marketplaces include:
PolicyGenius connects with more than just life insurance companies. It’s a one-stop-shop for a variety of insurance products.
PolicyGenius works with leading insurers and has live agents to help you with the application process.
PolicyGenius’ partner insurers provide coverage for all health profiles.
- Read our full PolicyGenius Review.
SelectQuote has been operating since 1985, about a decade before the Internet became a fixture in American homes.
SelectQuote is an independent life insurance agency working with some of the biggest names in the industry. You could get connected with the right coverage even if you have health conditions or other complications.
You’d also have access to live licensed agents.
- Read our full SelectQuote Life Insurance Review.
LeapLife lets you complete an application online or over the phone.
And Leap Life could connect you with term life, whole life, or universal life with policy amounts ranging to $5 million.
This platform provides no exam life insurance as well as policies for applicants up to age 75.
- Read our full LeapLife Insurance Review.
What To Know About Online Life Insurance Marketplaces
The convenience of shopping multiple companies at once is tough to beat. But be aware of these factors as you shop on a life insurance marketplace:
- You’ll Get Solicitations: Once you complete your application, you’ll be solicited by participating life insurance companies. You may be contacted by either email or by phone. Some insurers will keep reaching out even after you’ve accepted a life insurance policy from another carrier. In short, online life insurance marketplaces put you on the participating companies’ marketing lists.
- Marketplaces Provide Only a Starting Point: Marketplaces save time comparing quotes, but once you’ve decided to apply, you’ll be working with the insurer you chose, not the marketplace. Your actual application happens within the context of your insurer’s site and underwriting tools. Your quote is just a quote.
- Choices Can Be Limited: When you see a list of quotes from multiple insurers, you may get the idea you’re assessing the entire insurance market. But no aggregator represents all insurers. A non-participating insurer may have even-better rates.
- Results Can Be Confusing: Since you’ll get quotes from several different companies, you can become confused by the information provided. This will be especially true if you get quotes from a large number of companies. You’ll then need to sort through the details to make the determination as to which will be best for you.
None of these issues should prevent you from using an online marketplace to buy life insurance.
But in the interest of full disclosure, I want you to know exactly what to expect when you do. Using an aggregator beats making phone calls for a couple of weeks and keeping a database of quotes on your computer desktop. But they’re also not perfect!
When Buying Life Insurance Online May Not Be the Best Strategy
Did you notice the trend in my descriptions of the best online life insurance providers? They tend to favor younger and healthier applicants.
Yes, younger Gen Xers and Millennials are more likely to shop online for coverage, but there’s more to the story.
Younger and healthier people also buy the simplest types of life insurance most of the time. Simpler types of life insurance are easier to sell online — and they lead to the lowest life insurance rates on very large policy amounts.
So online shopping goes hand in hand with life insurance for younger applicants.
But what if you don’t fit the profile of young and healthy, or what if you want a different type of policy – particularly whole life insurance? You may find better results working with an independent life insurance broker.
An independent broker may work with dozens of different life insurance companies, rather than a select few. He or she may know exactly where to place your application if you have a health condition, like diabetes or high blood pressure.
In the life insurance industry, not all companies take the same view of each health condition. Some take a more favorable view and are more likely to approve your life insurance policy. Others may approve it with a very high premium, while still more may decline the application altogether.
An independent life insurance agent will be your best advocate if you have a significant medical condition. Working with an agent can lead you to the most affordable coverage, too.
If you’re young and healthy, buy life insurance online by all means. But if you have significant health conditions, or you’re older, or you’re looking for a different type of policy, it’ll be time to work with an independent life insurance broker.
Working one-on-one with an independent agent will also help if you have an unusual need such as a 2-year term life insurance policy or a decreasing term policy.
An agent might suggest New York Life, Northwestern Mutual, or another leading insurer that typically does not sell coverage online.
How Much Life Insurance Do I Need?
To get the best deal on life insurance — whether online or on paper — you’ll need to know a little more about how life insurance works.
Most people, especially younger shoppers, buy coverage to protect their loved ones from financial trouble in the future. If you died, and your family no longer had your steady income month after month, how would they pay the bills?
Life insurance could be the answer to this question. But to provide the best answer, you’ll need to assess your own life insurance needs. Here’s how:
- Consider Your Income: Multiply your annual income by 10, and use this as a base number for your coverage amount. If you earn $100,000 a year, $1 million would be in your coverage ballpark.
- Consider Your Debts: Do you have a new mortgage? What about private student loan debt? Credit card debt? Your loved ones would need to pay off these debts if you died unexpectedly. If you’re heavy on these kinds of debts, consider increasing your life insurance to match.
- Consider Your Assets: Do you have non-income related assets your family could depend on if you died? Maybe you have income from renting properties or from securities? If so you won’t have to rely as much on life insurance to gain peace of mind.
- Consider the Future: Who will pay the kids’ college tuition? What about that vacation home you and your partner had been dreaming about? You may want to build in some extra coverage for these sorts of future plans.
Finding your exact life insurance needs can be tricky, especially when you consider the way life changes as the years go by and your level of financial security changes.
A life insurance calculator could help you find your needs.
Should I Buy Term or Whole Life Insurance?
Term life insurance is simpler and easier to find online. It’s also the most affordable life insurance for most people. But you should decide in advance whether to buy a term life policy or permanent life insurance.
For most shoppers, a term life insurance policy will provide the most coverage for the lowest monthly payment. However, term lasts for only a certain time period — usually 10, 20, or 30 years. When your term expires, you’ll no longer have coverage. You’d need a new policy or to go without coverage.
Whole life insurance could last for the rest of your life. Whole life also accumulates its own cash value so it becomes an asset over time. Certain kinds of permanent coverage let you adjust the premiums and the death benefit later in life. Some of these policies also let you invest this cash value either in stocks or mutual funds.
The price gap between term and whole is significant. A 40-year-old woman, non-smoker, in excellent health could get $1 million in term coverage for about $50 a month through a 20-year term life insurance policy. The same woman could pay hundreds — possibly even $1,000 a month — for a whole life policy the same size.
So unless you have a specific need for permanent life insurance — or unless you need only a small policy — buy term life insurance. The best life insurance companies sell primarily term policies online.
Non-Medical Exam Life Insurance Online
I’ve already mentioned online life insurance excels with simple, term life policies for shoppers who are younger and healthier. In these cases you can skip the exam because you’re healthy.
But online life insurance also thrives with another segment of the market: guaranteed issue coverage for people in poor health.
Since insurance companies sell guaranteed issue life to almost anyone, regardless of their health, buying this coverage online tends to be easy.
This kind of coverage has lots of limitations, though, and insurance agents tend to call it “last resort” coverage. For example:
- The Coverage Costs a Lot: Since life insurers know so little about your health, they charge a lot in premiums.
- The Coverage Has Low Caps: You’d have a hard time buying more than $25,000 in coverage — a tiny fraction of the insurance you could buy with a medically underwritten term life coverage.
- The Coverage Has Waiting Periods: Most guaranteed policies make you wait for the coverage. If you died within the first couple years of your policy your loved ones couldn’t file a claim. (They could get a refund of your premiums, plus interest.)
Guaranteed issue has a more elaborate cousin, simplified issue life insurance, which you could also buy online. Simplified issue considers your health but does not require a health exam. Instead, underwriters will ask 20 or so detailed questions about your health.
This is one of the times when life insurance gets confusing. The companies I mentioned above — Haven Life, Bestow, Ethos, Ladder — can let you skip the medical exam because you’re healthy. You’d still get medical exam-based prices. Simplified issue lets you skip the exam but you’ll pay higher premiums.
Simplified issue also has its limits. Finding $500,000 in coverage would be difficult but not impossible.
Online or on Paper, Find Your Best Insurance Company
The best life insurance company for you will sell the coverage you need at a price you can afford. If you can find this kind of coverage online, congratulations — you can have coverage in place within days if not hours.
If online life insurers don’t provide the kind of coverage you need, take the time to go through the extra steps offline.
Having the right coverage for your family will always matter more than speed and convenience.