15 March 2013 0 Comments

Online Life Insurance

shopping onlineIt’s possible to buy just about anything online these days.  Days of schlepping from one store to another, looking for just the right item at the best price have been replaced with a few minutes in front of a computer screen, selecting from pictures and written descriptions, comparing prices and then waiting for the brown UPS truck to deliver your purchase.  If it’s not what you expected there will be return instructions included with your shipment.

So, wouldn’t online shopping be a good way to buy life insurance?  Going online to obtain information about life insurance can be helpful, but using the web to transact the purchase of life insurance rarely leads to the best deal for the consumer.  There are three major reasons for this:

  • Most online web sites are sponsored by a single insurance company touting their own policies.  Do you really think you will get objective pricing from a single insurance company?
  • Online buying that promotes the ease of the transaction—i.e. no medical exam and only a few questions—will not produce the best premiums unless you happen to be in terrible health or are a 5’2”, 450 pound alcoholic with a criminal record.  And the policy will be a one size fits all solution.
  • The complexity of potential life insurance solutions makes spread-sheet comparisons very confusing for the layman.

When purchasing consumer goods online, the buyer usually knows what he wants and can easily search for the best price.  With life insurance, even the most knowledgeable consumer cannot identify the best price online because the premium can only be determined after completion of the underwriting process.  An agent with access to multiple insurance companies who knows what questions to ask can predict what the premium will be, but the actual premium cannot be determined until a medical history and current physical, plus a financial and lifestyle report have been completed.  This does not lend itself to simplified, online shopping.

For those of you who are still convinced that meeting with an insurance agent is worse than death itself (see the Woody Allen concern in my Feb. 11, 2012 entry) there can be a good alternative solution…that’s what I cover in my next entry.

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