What are some of the pitfalls of buying life insurance online?
Most online insurance providers promote the simplicity of applying for life insurance online – no blood tests or medical exams, a handful of medical and pastime questions, and the policy can then be issued instantly. Nice and easy with no fuss!
But did you know that in the majority of cases you are paying between 5% and 72% more than you need to be paying compared to a fully underwritten life insurance policy. Some of the more well known online insurers and those attached to Health Funds tend to be the most expensive.
Not only are the online companies more expensive, but in the majority of cases can get you better terms and conditions with a fully underwritten policy than you’d get with an online provider.
For example, most online providers don’t allow you to increase cover without medical evidence if you have children or take out a mortgage, whereas the majority of underwritten policies do. Also, most online providers don’t waive your monthly premiums if you are disabled for up to 6 months.
The other problem with online providers is they have much lower limits for sums insured ($300k – $1.5M) compared to a fully underwritten policy which have no limits as long as you can pay for the premiums. In addition, the online providers only offer stepped premiums (cheaper now but go up with age) whereas an underwritten life policy also offers a level premium (more expensive now but remains steady over the long-term and generally more cost-effective after 15 years). It’s a bit like locking in a fixed mortgage rate where you know what your insurance premiums are going to be even into your 60s.
For trauma insurance (pays a lump sum on the diagnosis of a serious illness such as cancer, stroke, heart attack, etc) the online providers only provide basic cover and nowhere near as many medical conditions compared to a fully underwritten policy. The same applies for income protection which is more expensive when going direct and the policy terms are generally nowhere near as comprehensive.
So if you’ve purchased life insurance, trauma insurance or income protection online, please contact us for an obligation-free comparison as I’m sure we can save you money on your current premiums. If you’re considering purchasing life insurance online, then allow us the opportunity to compare what is available in the market from 13 different life insurance providers. Contact us today at Altura Financial Planning
Posted on September 12, 2011, in Altura Financial Planning and tagged BNI, BNI Spirit, Business Networking, Financial Planning, Financial Security, Max Pagnin. Bookmark the permalink. Leave a comment.