A Guide to Buying Life Insurance Online

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A life insurance policy is a sensible investment, especially if you have dependents that rely on you for financial security. In the past, if you wanted to buy a policy, you would probably contact your local salesperson or talk to your bank or mortgage lender who would give you advice on the best option for you. Now, with the arrival of online sales, it is more important than ever that you do your research before you commit to a contract. Here are some of the things that you may want to take into consideration before buying life insurance online.

Affordability

Finding a policy that's affordable in the long term is a key consideration. When times get tough, premiums are often one of the first things that people stop paying. By purchasing a policy with easily manageable monthly payments you are more likely to keep it going if you do have to make household budget cuts. Bear in mind, that if you let your policy lapse, it will be very expensive to reinstate or you may find that due to changes to your health, you may not be able to reinstate it at all. 

Living Benefits

Many companies now offer ways to utilize your life insurance while you're living.  Such benefits include receiving payments if you develop a chronic illness or need to go into a care facility. Check to see if your contract includes the option for a viatical settlement, which allows you to sell your policy to a third party should you develop a chronic illness or become terminally ill. In this case, you'll receive a lump sum payout that will be more than the surrender value but less than the sum assured, which can be used to cover medical or end of life expenses. 

Choosing Between Term and Whole Policies

Term life insurance, which offers coverage for a fixed term such as 1, 10, 20 or 30 years, is generally more affordable than whole life. This is because, as you may survive longer than the term chosen, there's a good possibility that the insurer will never have to pay out.  This type of policy is particularly useful if you need to cover your mortgage. Whole life policies pay out a lump sum to your beneficiaries when you die, no matter when that is. Consequently, premiums tend to be more expensive as the insurer will have to pay out at some point.

Immediate Payout

You may be attracted to online policies that offer fast coverage without the need for any medical exams. While these options seem attractive, you need to check the small print carefully. You may find loopholes where the company will not pay anything out until you've paid in two- or three-years' premiums. If having immediate coverage is important, this kind of policy should be avoided. 

Conversion Features

If you're considering term life insurance, check to see if the insurer will allow you to convert it to whole life in the future without proving that you're still healthy. This option will enable you to change the cover even if you have developed certain medical conditions that would preclude you from acceptance if you were to apply for a new policy.

Automatic Payments

Buying insurance online usually means that your payments will be taken automatically. If this is not the case, always ensure that you set up an automatic bank or credit card transfer to ensure that you don't run the risk of cancellation due to late or non-payment.