Let’s get something out of the way right up front: if you’re avoiding the chore of buying term life insurance because you expect it to be a major hassle, don’t. Times change and so has the experience of purchasing life insurance.
Thanks to this magical thing called the Internet (and real-time underwriting), the process of securing coverage is becoming less complicated and more convenient. But although it’s simpler than ever to check life insurance off your adulting to-do list, there are still a few critical steps you’ll to watch for along the way. Use these five tips to help you get the right coverage for your situation and at the best value.
What kind of policy are you really buying?
There’s a lot of life insurance out there, and not all companies are invested in matching you with the absolute best policy for your situation. Rather than focusing on products that are easier to sell or provide more profit to the company, you want a company that works with you to choose products that align with what you actually need.
Get clear on what you need before you start browsing. Are you looking for an inexpensive way to protect your spouse and young kids for the next 10 to 30 years? Then you may want to consider medically underwritten term life insurance. It’s a solid, affordable choice for many families looking for financial protection during the most years they need it most. (Like until the children are financially independent or your partner is near retirement.)
Additionally, if you’re in the market for term life insurance, make sure you are actually getting term life, not another type of insurance like an accidental death policy. This isn’t the same as term life.
Accidental death insurance, for example, will only pay a death benefit to your beneficiaries if you die because of an accident. This might seem reasonable, but keep in mind that, over time, you’re probably a lot more likely to die due to illness rather than an accident. Sure, there are some situations where accidental death insurance might make sense. For example, if you wouldn’t qualify for medically underwritten coverage due to an illness, it might be your best option for having some kind of coverage to help financially protect your family. If you would qualify for medically underwritten coverage, though, accidental death insurance can leave you gambling on how you might die.
By comparison, term life insurance provides you with a policy that pays out to your beneficiary should you die in a particular time frame — usually 10, 15, 20 or 30 years – regardless of whether you died by accident or illness. The benefit doesn’t rely on the specific cause of your death.
Are you paying more than is necessary?
One of the easiest ways to overpay for coverage is to buy a 100% “no exam” policy. These might seem like a very appealing option because they remove the hassle of a physical. And, they might be the right fit if you have a medical history that prevents you from qualifying for medically underwritten coverage. However, skipping a medical exam could be costly.
Most “no medical exam” policies cost more because they are typically guaranteed or simplified issue products. These types of policies ask less about your health history, and, as a result, cost more because the insurance company knows less about you. While these policies may have a shorter approval process, they are more expensive per month and are often limited in coverage amounts of up to $250,000 (compared to $1 Million+ with medically underwritten policies.)
Medically underwritten term life insurance, on the other hand, takes into consideration your health history when determining your real rate. Most of the time, medically underwritten life insurance requires a medical exam. But now, there are some companies and agencies (like Haven Life) that have leveraged modern technology to not need an exam in all cases. However, it’s very important to be honest when completing the application. The issuance of the policy or payment of benefits may depend upon the truthfulness of the answers given in the application.
If you are healthy and have an uncomplicated medical history, then you’ll usually get a better value with a medically underwritten term life insurance policy.
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Did you compare prices to locate the best rate?
Foregoing the medical exam or skipping medical underwriting aren’t the only ways to end up paying more for a policy. Just like anything else you buy online, you should make sure you shop around and get a collection of quotes before you make a decision.
An online price comparison site like Quotacy can help you quickly sort through some of your most affordable options. You can also search online to find lists of “average term life insurance prices,” as many sites offer free quote estimate tools. We have a free tool. For example, a healthy 35-year-old woman could buy a 20-year, $500,000 Haven Term policy issued by MassMutual for less than $20 per month.
Just keep in mind that these are estimates or averages and don’t reflect your actual rate. A number of factors influence the price of a life insurance policy once it is underwritten for you. That’s why with Haven Life, you can actually apply for your real life insurance rate, so you have a more personalized price versus a quote.
Is the process really online?
You’ve done your research, you’ve gotten a few quotes, and you found a policy that fits your needs.
…but you soon learn that these “online” companies require a phone number to start the application process. No thanks.
With a truly online-centric buying process, you should be able to actually apply online. In some cases, you’ll need to complete a medical exam to get your final rate, though, but that should be the extent of your offline communications. Unless, of course, you would like assistance from customer support.
One of the best ways to ensure you’re really getting a self-directed, digital buying experience is to read customer testimonials. By searching for customer reviews, you’ll know what kind of experience other people like you had.
Are you buying dependable coverage?
Know what’s arguably more important than customer testimonials? Company ratings.
When you buy term life insurance online, you need to consider how dependable that coverage is. In other words, how likely is it that the company will be able to pay out on your policy should your beneficiaries need it? The company needs to be financially viable today and demonstrate a history of financial strength that helps you to feel confident that it will still be around 30 years from now (especially if you have a policy that stretches over several decades.)
There are a number of life insurance rating agencies that help consumers by offering an opinion of the life insurance company’s strength and stability, including A.M. Best, Standard and Poor’s, and Fitch’s. S&P’s and Fitch’s both use a rating system with AAA, AA+, AA, AA- as its top four ratings. For example, Haven Life’s parent company MassMutual is rated A++ by A.M. Best (Superior; top category of 15) — that’s the highest mark you can get from that particular rating agency*.
You’ll want to start your comparison shopping by evaluating quotes on similar policies. But once you do that, consider the company ratings for the issuer of the policies, too. Choose a company that earned high marks from more than one independent agency and offers you the best pricing on the policy you want.
With all that time saved, you can spend more of it with the ones you love
There’s no reason to put off buying term life insurance because you expect it to be a significant hassle. Now that comprehensive coverage can easily be purchased online (and on your time), the barrier to financial protection for your loved ones has been drastically reduced. Although, feel free to tell your family it was a “huge pain” if you think it’ll make you seem like more of a hero.
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*Ratings are as of March 1, 2018, and are subject to change. MassMutual has also received other ratings from different rating agencies.