How to Buy Term Life Insurance Online... the Smart Way

It's no secret that there are thousands of life insurance agencies out there, all with websites of their own. Here's what to look out for

1. An online quoter. Term life insurance quotes are so simple to produce that you can get hundreds to compare in a moment. These quote allow you to quickly identify which insurer can offer the lowest price for you.
   
2. An independent agency. Some websites are actually run by life insurance carriers instead of life insurance agencies. The carrier is the company that ultimately receives your premiums and pays your death benefit. A carrier's website will sell products only from its own company. You want an agency's website because it will collect term life insurance quotes from multiple carriers and display them where you can compare them all at once, with a minimum of effort.
   
3. A wide selection. For the same reason that you want an independent agency, you want an agency that contracts with many insurers. Some agencies work with 5-10; others work with 50-100. You want the latter variety.
   
4. A quality selection There are over a thousand insurers that sell term life insurance, but no agency brings quotes from nearly that many companies. Why is that? Good agencies reserve their business for only the best insurers, those who have great financial strength, the kind that can survive such financial hits as the financial crash of two years back. Have a look at the carriers with which your agency contracts (a list may be found on the home page or the "about us" page). Look for names you recognize and trust, names like Genworth, John Hancock, ING, etc.
   

Lead generators are companies that look like life insurance agencies, but in fact, they have no power to sell you life insurance products. Lead generators aren't really dangerous, but they can be annoying.

What they do is request your contact information, then sell it to actual life insurance agencies, who may then contact you and offer to help you buy term life insurance.

How do you spot a lead generator? The fastest way is to look for an "about us" page on the website. If they don't have one, try another site. If they do have one, look for clues that indicate a legitimate agency, like the names of actual, licensed agents or the names of actual life insurance companies with whom they contract.

You can also read the material on the site attentively. A lead generator may indicate that by filling out their form, you consent to be contacted by eight-or-so life insurance providers.

Okay, this was the obvious step, but there still remains some instruction to be given about it.

First of all, be aware that when you fill out a quote form, you'll have to make at least one guess: your health class (a.k.a. rate class). Yes, the website you're visiting may have some instructions to help you determine your health class, but really your health class can't be known until an underwriter at a life insurance company reviews your information. This typically entails a medical exam and an investigation of your medical records. Moreover, different life insurance carriers may come up with different conclusions as to your health class. Just hang in there. You'll probably pick the right health class for yourself, and if you don't, your agent may be able to persuade the life insurance company to give you the class you believe you deserve.

Second, if you've been following instructions so far, you'll probably get a whole list of quotes from a whole slew of insurers. (Admittedly, your list may be only a handful if you are seeking an unusual amount of coverage.) The obvious choice appears to be to go with whichever quote is the cheapest. Good for you if this was your conclusion, but before you apply with that life insurance company, make sure they're a reliable company. Check financial ratings and customer service ratings. My favorite life insurance website, www.wholesaleinsurance.net, provides this information right on the quote page.

The exam won't cost you a thing. Where I work, at least, we pay a professional from an independent medical service, Superior Mobile Medics, to visit you in your home or office and administer the exam.

The exam entails taking a blood and urine sample—well, a blood sample and a urine sample (one each). People who have a real issue with needles or being partially disrobed in front of a stranger with an ice-cold stethoscope may need to opt for no-exam life insurance (simplified issue life insurance), but that's much more expensive.

Your medical examination plays a big role in the insurance company's evaluation of your health, and that plays a big role in the rate you pay for coverage. Consequently, it's a good idea to be your best self on the day of your exam. Here's the advice I give to everybody to make sure their medical exam turns out as well as possible.

1. Get good rest the night before.
   
2. In the two or three days prior to your exam, avoid alcohol, tobacco, and caffeine.
   
3. Likewise avoid cholesterol and excess salt.
   
4. Don't throw your body into a tizzy by taking up a new exercise regimen in attempt to be super fit for the exam.

And don't forget the fasting requirement! Your agent will telephone and advise you of this requirement.

It usually takes 4-6 weeks from the time that you apply for term life insurance online until the time that you actually get covered. That's just the way term life insurance is. You can dispense with the wait, knocking it down to as little as 15 minutes, by opting for simplified life insurance (no-exam life insurance) instead, but no-exam life insurance is far more expensive.

When your offer at last comes, it will come through your life insurance agent, which gives you and him/her a good opportunity to review it together. Chances are that your offer will exactly match the quote you received, but it will differ if the life insurance company thinks that you should be in a different health class than the one you indicated when requesting your online life insurance quote.

What should you do if your offer is more expensive than your quote? If your agent is a good worker and has experience with the insurer's underwriting criteria, he/she may be able to present additional information about you to the insurer and win a place in the less expensive health class for you. Otherwise, it may be profitable to compare term life insurance quotes again and apply to a new life insurance company.

If your offer differs from your quote and you're still content to take it, however, by all means sign your contract and send in your first premium. Once you have performed these two tasks, the contract goes into force.