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.

What are the risk factors that affect buying life insurance?

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:

  • smoke,
  • have serious health conditions, 
  • work in dangerous occupations, like lumberjacks or roofers, and
  • are older, since the risk of things like heart disease and cancers increases with age.

Insurance companies find out how risky it would be to insure you through a process called underwriting. During this process they: 

  1. Ask you questions about your health and lifestyle, and sometimes have you take a few medical tests. 
  2. Look at your answers and test results. 
  3. Decide if you're at a greater risk.
    • If so, your life insurance will cost more. 
    • If the risk is too high, you may not be able to get underwritten life insurance at all. That could happen if you've been seriously ill or you're very old.

Ready to buy life insurance?

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What's the difference between guaranteed-issue and underwritten life insurance?

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.

Do you know how much life insurance you need? 

Try this life insurance calculator to find out.

Why buy life insurance from an advisor?

When you work with an advisor to buy life insurance, you can get:

  • Potential cost savings and flexibility that come with being underwritten.
  • One-on-one meetings to ask questions that will help you fully understand your options.
  • A better understanding of the coverage and payment features offered that make sense for you.
  • Life insurance built into your overall plan. This can be especially helpful if your financial picture is more complicated due to: 
    • business ownership, 
    • a blended family, or 
    • if you want to use life insurance to leave money for your children.

Connect with an advisor for life insurance

Make informed decisions with helpful advice. 

Talk to your advisor or find one near you

Why buy life insurance online?

There are many reasons why you may want to buy life insurance online:

  • Convenience. You may prefer the ease and convenience of buying life insurance online. Think of it the way you do your banking or book your vacations. 
  • Small amounts of uncomplicated coverage. You may not need a very large policy or a lot of special features right now. 
  • Poor health or previous decline. You may have been turned down for underwritten life insurance because of poor health. But you want at least some coverage, so you're looking for a guaranteed-issue product.

How to choose the right type of life insurance

Life insurance calculator

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This article is meant to only provide general information. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.