Everything You Need to Know About Shopping for Life Insurance Online

It used to take at least a couple of weeks to get approved for a life insurance policy. Now, with online tools, it can take a couple of minutes.

Companies like Haven Life and CUNA Mutual, Inc., through its TruStage product, are now offering online approval for term life insurance policies that can get you coverage in the amount of time it takes you to make coffee in the morning.

But without a health exam and other procedures, how does it work? Two words: big data. Companies that offer online life insurance utilize large data sets that are analyzed to reveal patterns and trends for human behavior to make assessments about you, your habits and your health. “For example, [let’s say] we can find out through big data that you go to the gym regularly or that you run 10k races once a month — we can find out even what your finishing times are,” says Dr. Steven Weisbart, senior vice president and chief economist at the Insurance Information Institute (III). “Maybe we can infer certain things about your health status from that information that blood tests or urine tests or something might reveal, but only after several days, if not weeks, have elapsed.” The type of food you buy, your driving record and other data about your habits might play into this as well.

If you’re considering buying term life insurance online, here’s what you should know.

You need to shop around between companies

Prices are going to vary from person to person and from company to company. An extremely healthy person will likely find cheaper term life insurance by going the traditional route of submitting to a physical complete with EKG and bloodwork, but it’ll likely take weeks to get approved. A “less healthy” person, however, might find cheaper insurance by going the streamlined online route since there’s a less rigorous checkup process. No matter your health status, one thing is for sure: Different companies are going to offer you different prices for the same types of policies. According to Haven Life, by one example, rates for a healthy 35-year-old woman for a 20-year level-term $500,000 policy can vary over $12.51 a month between companies — adding up to a difference of over $150 a year. Sites like PolicyGenius and NerdWallet offer quote comparison tools to help you decide.

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