Term life insurance is the simplest type of life insurance policy. It is very easy to understand, it works like this: You typically pay a fixed amount per month for your beneficiaries to receive a fixed and agreed payout on death. It is a cost-effective way to provide a security blanket for a set time-period that might cover a mortgage, kids in college or expenses that would otherwise ruin your family in the event of your death; at the end of the period, it has absolutely no value.
It is easy to understand primarily because this is how most people see insurance; it is how we buy car insurance. We pay, hoping never to use it and at the end of the year, we pay it again. The parameters could not be easier, the younger and healthier you are, the cheaper the coverage. So why is it hard to buy?
Insurance companies prefer us to consult with a local agent that can guide us through this complex financial transaction. Is this just the way of the world? Should we accept that we must have this consultation with an agent who will make an admirable attempt to place a life insurance policy within the big picture of our retirement planning, net-worth management and inheritance planning? All these are good things and financial planning is highly advisable but what if we really do just want to buy a term life policy?
Barriers always create alternatives and web aggregators have sprung up offering us competitive insurance quotes in part to satisfy the growth in the Google search term ‘life insurance quote’. Aggregators often insist upon extraordinary amount of personal information and we accept a multitude of agents calling our homes.
A growing trend might derail the process and that is retail insurance. Term life is a becoming a commodity and if you want it, increasingly you can go online and buy it. In the US, this trend is slow, just a handful of smaller providers, but across the pond in the UK, they are fast saying ‘cheerio’ to the old ways. Life insurance sites are starting to look a lot like retail sites, stepping the consumer through a easily understood process. A quick estimate can be followed with a full online application and finally a purchase. A look at a screen shot for AVIVA, the UK largest insurer is typical; it follows all of the rules and best practice for retail buying online.
Online Application for AVIVA term life insurance
A progress bar shows the consumer where they are in the process and the hesitant consumer can call out to get help or request a call back. If any information is not available, the consumer can save and come back later. Specific concerns are addressed contextually with online help and the VeriSign badge provides security assurances. In short, while it is not perfect, it is a simple online retail application for term life insurance.
Of course, the agent cannot advise of us of all the products we could and should be buying and maybe more than a few people will make mistakes by self-serving. But, maybe more people will take out life insurance if it is simpler and avoid disasters for their families.
When will we see online life insurance in the US? It is here already but not in the same volume as in the UK but it surely is a matter of time.
