The life insurance industry has made purchasing individual term insurance easy to do online. You can check prices, compare features, find an agent or even buy a policy right online. Before you purchase term life insurance online though, read over this quick checklist designed to help you make the best possible insurance decision.
Check the policy term
Most term insurance is sold for a fixed period of time, that's why it's called a "term." Most terms last for 5 years, 10 years, 20 years or even 30 years. This is called level-term insurance and the longer the term is, the higher the price or annual premium will be. However, during the years that you hold the life insurance policy, your price or annual premium won't change.
It's always good advice to buy coverage for the longest term that you can afford. Most people buy their life insurance to last until retirement. For example, a 32-year old man may pay $420 a year for his $500,000 policy designed to last 20 years, but just $580 for a policy that lasts 30 years (and all the way to retirement). Those extra ten years of coverage only cost him an extra $14 per month, but they could be very valuable to his family.
Ideally, when your term is done, you won't need the life insurance anymore. Your kids will have grown up, you'll be at retirement and you'll have enough savings to live on.
Check if the policy is convertible
It's always a good idea to purchase a term life insurance policy that can be converted into cash-value coverage if you need it. If your health worsens, you may need it. If you have a child with special needs, you may need to extend your coverage to provide for that child.
Before you purchase term life insurance, check the term policy's conversion terms. Some policies only let you convert within the first five, ten or fifteen years while others allow you to convert at any point during the level-pay period.
Review the total annual premium
All term insurance does not come with the same price tag. In fact, the price variances between companies can be massive. You could save hundreds, if not thousands of dollars over the course of your insurance term just by doing some smart comparison-shopping online.
For example, take a 36-year-old man in good health purchasing a 30-year policy worth $500,000. One insurer might charge him, for example, $550 per year while another could quote as high as perhaps $1000 per year or more for virtually the same product.
Another rule to note is that older you get, the wider the price differentiates. A 50-year-old man shopping around for 15 years' worth of term life insurance could see discrepancies in the thousands of dollars.
It's also important to remember that life term insurance policies aren't automatically cheaper if you buy them online. You can often get the same prices or lower from a local insurance agent. So, if you prefer the personal experience, you can use online price comparisons for the base price points to discuss with your insurance agent.