March 22, 2022
By Anne-Levy Ward
Read time: 4 minutes
March 22, 2022
By Anne-Levy Ward
Read time: 4 minutes
You can do so much online: book a vacation, order groceries, rate your dentist. You can even buy life insurance online, sometimes without answering any questions about your health.
It sounds simple and easy, and it is. But the life insurance you buy online has some important differences from the insurance you buy from an advisor. You need to understand these differences before you decide how to buy. It's your life and it's your life insurance. Make sure you understand the facts.
Insurance is all about protecting yourself and your property from risks. Generally, the higher the risk, the more your insurance will cost. Why? Because the chances are greater that you'll make a claim. For this reason, life insurance usually costs more for people who:
Insurance companies find out how risky it would be to insure you through a process called underwriting. During this process they:
You can buy underwritten life insurance online or through an advisor. When buying online, there’s generally a simplified underwritten process with fewer health questions. The extent of that underwriting will depend on your age and how much insurance you're applying for.
Guaranteed-issue life insurance that you buy online typically requires little, if any, health information from you. That's why high-risk people tend to buy it. This means the proportion of high-risk policyholders in the guaranteed-issue pool will be much higher than in the underwritten life insurance pool. Insurance companies need to adequately protect many people at such a high risk of dying. Since guaranteed-issue pool doesn’t separate between healthy and unhealthy people, the cost is significantly more. Because the risk is high, guaranteed-issue policies tend to be small (typically no more than $25,000).
That's why, if you’re reasonably healthy, it could be worth the time and effort to buy an underwritten policy. You could end up paying less and getting more coverage. And the health screening process isn't as onerous as it once was.
You're not limited to guaranteed-issue policies when you buy online. There are life insurance options that fall somewhere between guaranteed-issue and fully underwritten. These offer larger policy amounts and more features than guaranteed-issue and ask some health questions. Because they're not fully underwritten, they might cost a bit more. But you might be willing to pay for that online convenience. If your situation changes, you can speak with an advisor to develop a personalized plan.
When you work with an advisor to buy life insurance, you can get:
Make informed decisions with helpful advice. Talk to your advisor or find one near you
There are many reasons why you may want to buy life insurance online: