For the most part, completing a life insurance application online is an easy task. But just because it’s easy, doesn’t mean it should be taken lightly. There are significant risks associated with filling out an insurance application online.
1) A Declined Application Stays on Your Record for Life and Limits Your Options in the Future
A client of ours recently neglected to tell us that he had previously completed two online life insurance applications with other companies. We discussed his medical history and discovered that he had a significant issue. After putting in preliminary requests with several companies (using only his first name so it would not affect his record), all of them said he would be declined. With this knowledge, we agreed on a plan that was slightly more expensive than a traditional policy, but also designed for people with his health issue who have never previously been declined. It was still within his budget and he could honestly answer the questions to qualify.
The day after we completed the application, he called to tell us that he had been quickly declined by a company he had previously submitted an online application with. We had sent the application to him for signature but it was no longer valid, as he now had a decline on his record.
2) A Fast Application Process Fosters Less Opportunity to Save
For healthy applicants, online applications generally cost more. For example, Costco life insurance rates cost 50% more than similar traditional life insurance policies (after the executive discount). In addition, an insurance agent can determine if you have a good chance of getting a preferred rate or discount from the normal rate. Up to 40% of people will qualify for these, and you do not get this option online. In addition, an advisor can find the best policy for your particular health and hobbies, and it doesn’t cost anything for their service (instead, the company pays them a commission). So why not take an extra bit of time and get good advice while saving some money at the same time?
3) Your Application Won’t Be Properly Reviewed Prior to Submission
Completing an application online increases your own personal accountability. The trouble with this scenario is that the average person does not know the ins and outs of the insurance process. This results in people answering questions they don’t understand the context, purpose, or importance of.
An experienced agent, however, will be able to review questions and your health situation to find the best policy for you – perhaps a different company’s policy fits your situation and needs better.
4) The Completion Process Can Be Slow and Time Consuming
Since filling out an application online is so quick and easy, it seems fair to believe that it will result in getting the policy faster. In many cases, this couldn’t be further from the truth. After submitting your online application, the insurance company has the option to come back with further questions or even order a report from your doctor. If you are healthy, many agents have access to a company that will do an instant issue insurance policy. You can pay for this with your credit card – online apps do not have this option.
A life insurance policy is a great thing to have, as it takes care of your family in their time of need. Since you will spend thousands of dollars on this policy over the next ten years or more, take a few more minutes, talk to an expert, and get the right policy for you, while saving some money in the process.