Ordering everything online has made instant gratification the norm. So, the traditional process of buying life insurance – with its paperwork, medical exams, and weeks-long waits – can seem outdated. But, that is changing. Some companies are now making life insurance easier to obtain.
What is Instant Life Insurance?
Instant life insurance refers to policies offering quick application processes without requiring a medical exam. These policies use “accelerated underwriting” to quickly assess risk and determine rates. Insurers use algorithms and data points to evaluate your risk of dying early. This enables them to make a quicker decision and make competitively priced coverage offers.
Instant policies typically offer term life insurance coverage lasting from 10 to 30 years.
How Instant Life Insurance Works
Applying and buying an instant life insurance policy is usually a seamless online process:
- Online Application: Apply online by providing personal information and answering health and lifestyle-related questions.
- Data Retrieval: With your permission, the company accesses information from various databases, such as prescription records, motor vehicle reports, and the MIB Group (a database of information from insurance applications).
- Decision: You’ll typically receive a decision within minutes of submitting the application.
There are three possible outcomes:
- Approved: Coverage is activated once you accept your policy and pay the first premium, often on the same day. Medical exams are not required.
- Denied: Coverage isn’t guaranteed. Denial may result from factors such as health, lifestyle, or age. In case of denial, you can explore traditional life insurance or guaranteed-issue policies.
- Referred to Underwriter: Sometimes, the insurer needs additional information. In this case, your application goes to an underwriter to evaluate your risk.
Types of Life Insurance Underwriting
When shopping for an instant life insurance policy, you may encounter the following terms:
- Automated Underwriting: A lack of human involvement in the approval process.
- Accelerated Underwriting: Fast application processing typically includes algorithms and extensive data points.
- Simplified Issue Underwriting: Relies less on data points than accelerated underwriting to determine policy issuance and cost.
Policies utilizing more data points often can provide competitive pricing with higher coverage amounts. In contrast, insurers using fewer data points might provide a less competitive rate.
Some companies fast-track applicants with accelerated underwriting but retain the right to request a medical exam if needed. Applicants approved without an exam receive the same terms as those completing the exam.
Tips for Buying Instant Life Insurance
If you need life insurance urgently or want to avoid a medical exam, consider these tips:
- Determine Coverage Length and Amount: Calculate how much life insurance you need and for how long to narrow your options.
- Assess Approval Chances: Instant life insurance favors healthy applicants with safe lifestyles. Pre-existing conditions, hazardous jobs, or poor driving records may necessitate traditional policies.
- Review Policy Features: Consider riders and options for converting to a permanent policy.
- Compare Quotes: Premiums vary based on data usage and eligibility. Getting quotes from multiple companies is always a good strategy.
Nerdy Tip Try to obtain quotes from both conventional and instant life insurance providers so you can assess price variations side by side.
