Is Buying Term Life Insurance Online The Same As Buying It From An Agent?
You've probably seen plenty of advertisements for term life insurance. But is it wise to buy it online? A quick search brings up a number of options, so how do you know which is the best one to choose?
Well, in this article we're going to help you out and teach you all about whether buying term life insurance online is a good idea or not. We'll also explain why some people are skeptical about buying from an agent instead and shed some light on pricing terms.
Let's get started.
You find a good deal, but there's a catch
So you've found a really good deal on term life insurance online. But… there's a catch. You're not sure how to spot it, but there is something is up with this policy after all! And you think that the price is possibly too good to be true? Is that the case?
You take a closer look at the policy and notice that it's very long term. As well as being quite expensive, it also has some pretty stiff health qualifications. None of which really fit with your character or lifestyle.
So what happened? Well, you fell victim to one of the common scams that exist within the life insurance industry. You'll often see these scams advertised through spam email. The insurance companies send out thousands of emails each day looking for new customers as they look to earn commissions.
Simply click on the link within the email and you're taken to a fake website that is made to look just like an online insurance shop. The insurance may be cheap at first glance, but from there you can see why it's probably not the best policy for you.
In this case, the 'cheap' policy is probably a medical exam term life policy that would leave you with very little coverage. So yes, look closely to see whether or not it is a good deal or even worth considering!
Every online renewal or new purchase will need to go through another medical examination. If you fail the exam then the coverage amount will be reduced as well. Doesn't sound too good when put like that!
We'll have more about health and lifestyle issues later on in this article. But for now, keep your eyes open when you're looking to buy term life insurance online.
How much should you pay for term life insurance?
So let's say you've found a very good deal on term life online. And that the insurer is going by a renewal price of £100 each year with no medical check-up required! Life insurance companies will often quote an annual premium – but sometimes they don't even mention how much the premiums are going to be! This is because those who sell these policies are not actually agents. They just use terms such as 'in-line' or 'as low as'. It's often up to the buyer to know exactly what they're paying for.
So how much should you pay per year?
Well, the answer really depends on your age. Additionally, it also depends on whether or not you are going to have a medical examination done.
Life insurers look at your age and health when calculating what kind of coverage they will give you. This is because they want to know that their policy is going to be there for them if something happens… and that you're also going to be able to pay for it! So if you want cheaper rates, then it's probably worth having a medical exam done too. Otherwise, you could be left with little or no coverage when the time comes.
In the UK (and worldwide) there are different categories for life insurance. And each of them come with their own rates, premiums and conditions. But for the purposes of this article let's look at term life, cash value and whole life insurance!
Term Life Insurance in the UK – Short Term / Long Term
As you can see from the picture above, there is a big difference between short term and long term insurance. The former is often known as 'term', while the latter is more commonly called 'whole' or 'permanent' policies. Some people mix the two together but we're going to stick with the terms to make it simple.
We'll start with term life as you may be better off for it!
So if it was a very good deal that you found online, then the price per year is probably around £100. This means that you would pay a premium of £100 per year for a 40-year period. For all intents and purposes this isn't actually a long term policy if you're younger than 40. It doesn't matter how much cover you have, because when your term ends and your premium drops, so does your coverage amount! This means that in essence, all of your protection numbers are simply based on age only.
But what about that medical check-up? Well, it may be a good idea to have the medical check-up done too. This way the insurer is able to take your current physical state into account when assessing if you are still suitable for the policy or not. They want to make sure that you're going to be able to afford the payments! And also that you are still alive to pay them!
Cash Value Term Life Insurance in the UK – Medium Term / Long Term
As we mentioned before, term life insurance doesn't last long enough for some people. But what if you're looking for something more substantial? Let's take a look at the next one – cash value.
The quotes of a cash value policy can be much higher than term life, but you are able to build up some money in the policy over time. This can mean that your income becomes much more secure and you also have a nice nest egg for yourself when it comes to retirement. But before you get too carried away, remember that this type of insurance is expensive!
Like we mentioned earlier, your actual rate is based on health too. The insurers are just trying to make sure that they aren't paying out benefits unnecessarily.
Conclusion
At the end of the day you'll have to decide which kind of life insurance best suits you. The most common types of insurance are term life and cash value. Term life can be expensive, especially if you want to pay for it in case you fall ill or else. But it can also save you a lot of money if your health is still good!
Whole life on the other hand is also expensive but it could be right for some people too. Life is unpredictable and things can happen that we simply don't expect. So why take any chances?
Each option has its pluses and minuses, so make sure that your mind is made up before purchase.