Term Life Insurance Online
Today, term life insurance is one of the best consumer buys. It can be purchased online in a matter of minutes. This capability is a triumph of modern technology. The fact that we are able to buy term life insurance online with lightning speed doesn’t necessarily make that the best course of action, though. The optimum approach is to combine computer technology with old-fashioned caution, preparation and horse sense.
How to Shop for Term Life Insurance Online
It may seem that the first thing to do when shopping online is to fire up the computer. In fact, the preparation necessary to buy term life insurance online may be better done offline. One thing a would-be insurance buyer needs to know is how much insurance to buy. This requires a calculation of insurance need. This is a specialty of financial planners, people with impressive credentials such as CFP, CFA and ChFC after their names. These people not only study intensively for at least a year in order to gain certification as financial planning experts, they also have a legal, fiduciary obligation to put their client’s interests first at all times.
Technically, calculation of insurance need is not rocket science. It simply requires determining all possible reasons, durations and magnitudes of insurance. For example, a planner would enumerate all significant sources of debt (consumer, mortgage, other loans, etc.), list their maturities and calculate the amount of income necessary to amortize all these liabilities. This undertaking benefits from the methodical, detached professionalism that financial planners acquire.
Still, it is possible for a layperson to do it. There are even websites that offer plug-in tools for performing the necessary calculations. Whether to do it yourself or employ a professional is a decision that each of us must make for ourselves.
Once insurance need is identified and quantified, the next step is to separate temporary from permanent needs. The traditional, basic insurance needs – mortgage, college education, spousal and family support – tend to be temporary. More specialized needs, such as estate planning and final expenses, will require permanent insurance. It is the temporary insurance needs that should be satisfied using term life insurance.
Finding the Best Company and the Best Rate
Once the nature and magnitude of term life insurance need has been established, it is time to start shopping for companies and rates. This is where buying term life insurance online really comes into its own.
There are thousands of insurance companies to choose from Most of these companies offer term life insurance. Until recently, the thought of canvassing such a universe of possibilities would have been unthinkable. Today, computers can do the job easily. (Once again, expert assistance is available in the form of insurance brokers with vast databases ready to hand.) Websites allow you to insert your personal data into a computer program that will spit out the rates charged by the insurance company of your choice.
Once again, however, caution dictates an intermediate step. The term life insurance contract guarantees that, in the event of the policyholder’s death, the insurance company will pay a death benefit equal to the face value of the policy. A guarantee is only as good as what stands behind it, however. In this case, the financial strength of the insurance company underwrites its ability to pay claims. Fortunately, at least four major rating agencies evaluate and publish the financial strength of life insurance companies. Once again, websites will provide ratings for particular companies or list companies that meet threshold rating requirements.
One could first locate low-priced insurance, then check the financial strength of the insurer. It probably makes more sense to first compile a list of strong companies and only then check their rates. Either way, this is the sort of task that computers can ease.
Enrolling for Term Life Insurance Online
Enrollment can be done online as well. Sometimes this can be accomplished in a matter of minutes. This will depend on the answers given to the qualifying questions posed by the website. (This may be a particular insurance company’s website or an independent plug-in website.) Any sort of underwriting – that is, review by the insurance company’s actuaries and raters – will require a few days at least. In any case, this vastly improves on the old days of buying life insurance, with their home visits, lengthy exchanges of paperwork and long delays before approval. (The fact that the agent sometimes bound coverage by taking a check on the first home visit was deceptive, since subsequent changes in underwriting often required re-doing much of that initial work.)
Buying term life insurance online is a snap. In fact, it may be too easy, because it may encourage some people to be too hasty in determining their insurance need or in picking a company solely on the basis of a low premium. While it is perfectly possible to do it yourself, many people will benefit from the calm, low-key expertise provided by a financial planner who calculates the nature, amount, and duration of insurance need.
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