Nowadays, so many tasks that used to be a hassle can be accomplished effortlessly from the comfort of our home using one of the many electronic devices that are part of our daily lives : order groceries, book a vacation, rate your dentist office, etc. Unsurprisingly enough, life insurance can also be bought online — instead of dealing with an advisor or an agent — but if you choose to go that route, you need to make sure that you know exactly what you’re getting into. Let’s discuss what life insurance is all about and then compare the pros and cons of purchasing this type of financial products through an advisor or directly online.
How Exactly Does Life Insurance Work?
As you can imagine, the basic idea behind life insurance — or even insurance in general — is to spread risks among as many people as possible. The more people contribute to the pot via their premiums, the more overall coverage the company can provide and all other things being equal, the less expensive it is for the insured parties. A life insurance provider collects all the premiums (which are monthly or annual fees) paid by its hundred of thousands of policyholders and pools them together in order to pay the benefits owed to its customers, other expenses and, of course, taxes. The rest of the money is usually invested in long-term, low-risk investments that earn modest but almost-guaranteed returns in order to cover the future needs of the other policyholders. That being said, how to determine if you should deal with an agent or cut the middleman and go directly online?
Why Buy Life Insurance From an Agent
If you choose to deal with an agent, this professional will assess your overall situation and profile in order to present you with the best options in terms of life insurance. This process is called an underwriting and it gives you flexibility as well as potential cost savings’ opportunities. Plus, dealing with an actual person comes with several obvious benefits, one of which is the possibility to ask questions regarding your options if you’re not familiar with life insurance products. Furthermore, doing business with an advisor will give you access to a wider range of financial / insurance products since some of them are simply too complex to be offered online in a user-friendly manner. Finally, getting life insurance usually is (or should be) part of a broader, more comprehensive financial plan. Insurance agents are typically qualified enough to help you assess which insurance products fit your overall portfolio/financial strategy and help you build a comprehensive plan.
Why Would You Purchase Life Insurance Online?
Considering what you just read, you may wonder why would anyone ever buy an assurance vie 100% en ligne, and the main reason is not exactly groundbreaking. Being underwritten can be a long and tedious process, and then you have to sit or to spend time on the phone with an advisor to select an insurance product. Fitting this whole process into a busy schedule can be challenging, and thus the prospect of getting to the end result — getting life insurance — in a matter of minutes, sometimes, is very attractive to some people. Another reason why some might turn to online life insurance is because their insurance application has been declined by regular brokers. One of the main benefits of online life insurance’s companies is that they typically offer guaranteed-issue life insurance. As it says right there in the name, this type of insurance product is ideal for people that can’t pass or don’t want to go through the underwriting process for various reasons. That being said, since you’re getting insured no matter what and almost-no-questions asked, the premiums are generally a lot steeper than conventional life insurance products’ and the death benefit a lot more limited (typically under 50 000 $).
Most online life insurance’s companies also offer products that fall anywhere between fully underwritten and guaranteed-issue. Then again, this convenience has a price but if you put a premium — no pun intended — on this aspect of the transaction, online life insurance may just be the ideal product for you.