How to buy life insurance online

These days Canadians have two common choices to buy term insurance; they can get a term policy completely online, never speaking to an advisor. Or they can work with an advisor remotely over phone/zoom. I'm going to compare and contrast these two choices here.

Pros of dealing online

There are some potential advantages to working with a life insurance company online in particular:

1. No sales pressure.
2. Move at your own pace.
3. No medical exam.
4. Instant approval.
5. Cheaper life insurance.

I'm actually going to dispute the idea that you need to be online for 3, 4 and 5 in just a moment. These are more product specific concerns than sales process concerns and require some further explanation.

The risks and drawbacks of dealing online

1. No individualized service. It's going to be a call center or someone inexperienced in life insurance.
2. Improperly completing the medical health questions runs the very real risk of a claim being denied. If a life insurance company does an investigation after you pass and finds something that they asked about that you didn't disclose, they can potentially deny the claim. Are you confident you've answered all the medical health questions correctly? Or are you exposed to a claim potentially being denied?
3. You are limited to one company only — there's no shopping the large list of Canadian life insurance companies on price, or importantly, product features.
4. Most of the online life insurance policies we're aware of are lacking in the conversion guarantee. They may not offer conversion at all, or they may only allow conversion to another term policy, not to a permanent policy. And these distinctions are generally hard to find.

Pros of dealing with remote advisors

1. Personalized advice on the amount of coverage and the types.
2. Ongoing service and support from the same advisor over the course of your policy — often decades.
3. Coaching and assistance with your personal health questionnaire. Properly completing the health questionnaire reduces the risk of claims denial.
4. Online vendors require a health questionnaire that gets evaluated and either approves instantly, or sends the application to an actual underwriter. This often gets marketed as no medical exam and instant approval. But here's the thing — many mainstream companies are doing exactly this with the policies they offer through independent advisors. RBC Insurance, Cooperators, Wawanesa, and many others all offer a simple health questionnaire done with your advisor that when submitted either gets approved instantly, or in some cases gets sent to an underwriter. It's the same process; it's just that consumer awareness hasn't kept up.
5. You have access to a full breadth of the main life insurance companies in Canada, you should be provided a shopping quote comparing both costs and policy features. If there's better insurance out there, a remote advisor should find it for you instead of just offering one company. For example, our process with clients goes through 5 discounts not generally found at the online companies.

Cons of dealing with remote advisors

1. Scheduling is required, and often you'll be spending 45 minutes to an hour on a zoom or phone call so the advisor has enough info to make a recommendation.
2. Some back and forth is required as you work through and review various policy options.
3. You do have to talk to a person and likely disclose personal medical and financial information.
4. You have to trust the advisor. If it's a poor advisor, you're getting poor advice.

Summary

In the end, your choice boils down to self-serve vs personalized and professional advice. You already saw in point 4 in the pros above that a remote advisor is likely to have the same policy features, and possibly better ones than a fully online company. The days of comparing "no human means a better experience" because it removes sales pressure, are mostly over.

If you're confident you know exactly what you need, are able to navigate the medical questionnaire yourself, and are confident that you've evaluated policy features correctly, then online can be viable. Otherwise, you will be far better served by finding a suitable remote advisor.

Here at The Term Guy, we are educational and service centered. We are very much about individualized, professional advice. All of the many articles on this website, and the videos were 100% hand crafted directly by me, and if you call, you'll speak directly to me for insurance questions, or my expert admin person for admin type questions (banking, billing, etc).