What exactly is term life insurance online, and how is it different from other types of insurances? At the same time, is it the best type of insurance for you? Find out here!
The world has certainly changed for the better since a lot of new technologies and developments are making lives more convenient.
This is even now the case for term life insurance online. You can avail of it without leaving the comforts of your home.
What Is Term Life Insurance?
Term life insurance is a type of life insurance that guarantees a death benefit payment if the insured dies within a specific term.
Once it expires, the policy owner has the choice to either renew it or convert it to permanent coverage.
If the latter is chosen, the term life insurance policy will then be terminated.
These are the different types of term life insurance:
- Decreasing Term Policies
The unique thing about this type of term insurance is that the policy’s death benefit declines yearly according to the agreed-upon dates.
For this type of policy, the insured will pay a fixed, leveled policy term premium.
This type of policy is compatible with policyholders paying a loan or mortgage.
- Yearly Renewable Term Policies
Yearly Renewable Term policies can easily be considered as one of the most popular term life insurance online because it is no-fuss and very affordable.
As its name suggests, the coverage duration is 1 year, and it can also be renewed yearly.
Take note that the premium cost changes yearly for this type of term life insurance.
This means that the older the insured person gets, the higher the premium will be.
This is why this type of term life insurance is not really attractive for older people because it will be much more expensive.
- Level Term or Level Premium Policies
This type of policy offers coverage for a specific period between 10 to 30 years. It has a fixed premium and death benefit.
Since the policy duration for this type of term life insurance is much longer, it is a bit more expensive than yearly renewable term policies.
This is because insurance companies have to take into consideration the increased insurance cost over the duration of the entire term.
Whether it’s a term life insurance online or one availed through traditional means, the premium is based on the policy’s value along with other factors such as age, health, and gender.
In some cases, insurance companies might also require a medical exam and also history about your family, medications, occupation, and driving records.
However, take note that if the insured outlives the expiry of the term life insurance online, the money paid for its premium will be given back. Instead, they have the option to renew or terminate.
Term Life Insurance vs. Whole Life Insurance
The main difference between term life insurance and whole life insurance is in the duration of the coverage.
For term life insurance online, the coverage can either be 10, 20, or 30 years.
Meanwhile, as its name suggests, whole life insurance covers the insured until their death.
However, whole life insurance can be 10 times more expensive than term life insurance, mainly because the insurance company is taking on more risk on their end.
But, the advantage is that it has a savings component. This means that you can borrow or withdraw against the savings portion of the whole life insurance policy.
Benefits of Term Life Insurance Online
Is term life insurance online the best choice for you? The following benefits might help you with your decision-making:
- Cost-effective
One of the biggest benefits of term life insurance is its affordability.
The reason why it’s much more affordable than other types of insurance is that its coverage is only for a predetermined time.
Insurance companies are hoping that the insured will outlive the terms. The policy will expire without anything happening to them.
Although the coverage is not as comprehensive as whole life insurance and does not have a savings component, affordable insurance is much better than having no insurance.
- It Offers Flexibility
Another reason why term life insurance is worth considering is that you have many options.
There is term life insurance online that lasts only for one year and can then be renewed.
If you want insurance that’s a little longer, you can opt for 5 or 10 years.
- Ideal for Young Families
Most young families are not yet very financially stable. This is why it’s understandable if the family’s budget for insurance premiums is not that much.
This is why term life insurance is a good option since it is quite affordable.
Moreover, term life insurance is an excellent choice for young families because it provides peace of mind that you will not financially burden your young children or widow if you die.
- It Is Uncomplicated
One of the most challenging things about navigating adulthood is dealing with things like taxes and insurance.
Unfortunately, not much about these things are discussed in schools, so many youngsters are left figuring it out on their own.
Luckily, term life insurance is super easy to understand. You just have three main things to figure out; length of term, coverage amount, and preferred company.
By simply paying the premiums for the policy duration, you have nothing else to worry about.
Moreover, it is also very easy to shop and compare rates for term life insurance online.
There are plenty of companies who offer free quotations for this if you are interested.
How to Buy Term Life Insurance Online?
Here’s a general overview of how to buy term life insurance online:
Step #1: Understand The Essence of a Life Insurance
Before anything else, it is very important that you understand what life insurance is in general.
Make sure that you do adequate research about it beforehand.
It would also be very helpful if you understood how insurance works. Most of the time, it is not really for your own benefit but for those who you will live behind in case you die.
Term life insurance, in particular, is designed to prevent your family from suffering financially in case you die because the death benefit can be used for childcare, funeral expenses, mortgage, etc.
Moreover, you have to note that it can be a huge commitment, even if it is only term life insurance.
You need to diligently pay the premium on schedule so that your family can get the benefits in case something happens to you.
If you don’t, your policy will be forfeited, and everything that you paid before will go down the drain.
Step #2: Decide on What Term Life Insurance is Suitable for You
Once you have a good understanding of life insurance and decide to go for term insurance, the next thing that you have to figure out is what type of term life insurance you are looking for.
Are you looking for term insurance that will cover you for a year or one that can last for several decades?
Also, during this stage, you have to consider how long your term will be. If you have young children, it is recommended for your policy duration to last until they finish college.
The same thing applies if you have a mortgage.
Step #3: Shop Around
The good thing about term life insurance online is that plenty of companies offer it.
This is why it’s highly recommended for you to shop around so that you can get a better idea of the types of premiums that they offer and their prices.
This will save you from having regrets later on when you know that there could have been something better.
Most life insurance companies nowadays offer free quotations available on their website. The price for your premium is typically based on the following factors:
● Age
● Health history
● Gender
● Drinking, drug, or smoking habits
● Hobbies
The factors mentioned above will help insurance companies determine the amount of risk that you have.
Basically, the lower your risk factors are, the more affordable your insurance premium will be.
This means that if you are a healthy individual with no vices, then your premium will be much lower.
More often than not, women have a more affordable premium compared to men.
One reason behind this is that women tend to have a longer average lifespan than men.
The same case also applies to occupation. Those with dangerous occupations such as police and firefighters have more expensive premiums.
Step #4: Comply with the Application Process
Term life insurance online is designed to be accessible and convenient. During this phase, it is standard to be asked about details regarding your age, health history, occupation, family history, and many more.
Make sure to answer these accurately because the insurance company you’re applying to will fact-check the information with third-party vendors such as the DMV, Social Security Administration, and Medical Information Bureau.
Compared to in-person applications, online term life insurance applications are analyzed in real-time.
This means that you are most likely to get results about your application almost immediately instead of waiting for weeks.
Once the application is approved, your coverage can start the following day.
Factors to Consider When Choosing a Company that Sells Term Life Insurance Online
There are many companies that offer term life insurance online. This wide range of options can make the decision-making process a little challenging for you.
In this case, the following factors might be helpful in pointing you to the right insurance provider:
- Company’s Reputation and History
An insurance company’s reputation and history can tell you about the quality of service that they offer. Make sure to do proper due diligence about the company.
Try to look for reviews, not only those that are positive but also those that are not so good.
This way, you will be more objective in determining whether it’s an isolated incident or they really operate that way.
It’s also best to check third-party reviews platforms instead of just focusing on the reviews found on the company’s website.
- Legal Accreditation
Another important consideration when choosing an insurance provider is its legal accreditation.
As much as possible, only choose those that are recognized and government accredited.
This is because this will ensure you that they adhere to guidelines, policies, regulations, and rules for you to get what you are paying for.
- Ease of Transaction
It would help if you also considered the ease of doing business with an insurance provider.
Try and take a look at whether they have services such as online claim reporting, online bill payment, or billing question helpdesk.
This will save you a lot of time and effort that you can invest in doing more important things.
- Customer Service
One way of knowing how an insurance provider treats their customer is by looking at their customer service.
A sign of a company that gives importance to their customer is if they have various communication channels available and they are highly responsive.
Opting for a provider that is easy to approach and communicate with will definitely come in handy when it comes to filing plains and other similar transactions.
You can also assess their responsiveness from the moment that you request a quote.
Many prominent insurance providers have automated quote calculators that will estimate how much your premium will be based on the information you input.
- Full Disclosure
Unfortunately, some companies have fine prints, which might put you at a disadvantage later on.
This is why I always go for an insurance provider that has a full disclosure policy.
This ensures that you get the utmost transparency with the term life insurance that you are buying.
Final Words
There you have it; those are everything that you need to know about term life insurance online.
Its main difference compared with other insurance is its policy coverage duration.
Although its coverage duration can be much shorter than other types of insurance, it’s a reasonable trade-off given that it is affordable, convenient, and accessible.