When you’re accustomed to the immediate pleasure that comes with purchasing things online, purchasing life insurance can feel painfully outdated.
Until recently, if you wanted to get a large amount of life insurance at a reasonable cost, you had to fill out paperwork, go through a medical exam, give a urine sample or have blood tested, and then wait 30 to 90 days for a policy.
But that is changing. Some organizations, ranging from traditional insurers to technology-driven startups known as “insurtechs,” are simplifying the process of purchasing life insurance. Applying online for fast life insurance takes only a few minutes, and coverage can be in the millions of dollars without requiring a medical exam.
What is instant life insurance?
Instant life insurance is coverage that is easy to apply for and does not require a medical examination. However, these policies differ from guaranteed issue life insurance, which is a tiny and expensive policy aimed at seniors. Instant life insurance often uses a procedure known as “accelerated underwriting” to predict rates. An insurer feeds data about you into computers to determine your risk of dying prematurely. This procedure frequently gives sufficient information for the company to make a speedy assessment and provide competitively priced coverage on the spot.
Instant policies are often term life insurance policies that last from ten to thirty years.
How instant life insurance works
Applying for and purchasing an insurance is rather simple because the entire procedure takes place online.
Here are the steps:
- You apply online by completing a life insurance application with your personal and contact information, as well as answering some basic health and lifestyle questions.
- With your permission, the company obtains information about you from several databases. For example, it can check prescription databases to determine what prescriptions you’ve taken. It can check your driving record to determine if there have been any violations. It can also review data from the MIB Group to see if any health issues arose when you filed for individual health or life insurance with other providers. MIB is owned by its member insurance companies and maintains a database of insurance application information.
- You will often receive a decision within minutes of submitting your application.
There are three potential outcomes.
- Approved. This signifies that nothing in your application made the insurer hesitate to cover you. Your coverage will begin whenever you sign off on your insurance and pay your first premium, which can all occur on the same day. You will not have to take a life insurance medical exam.
- Denied. While you are welcome to apply for a quick life insurance policy, coverage is not assured. You may not be eligible for coverage due to variables such as your health, lifestyle, or age. If you are denied, you can still apply for a regular life insurance policy, albeit it may take a few weeks. Alternatively, you can apply for a guaranteed issue coverage and avoid the health questionnaire and medical exam.
- Referred to underwriter. Sometimes insurers require extra information about you before making a decision. Rather than using algorithms, the insurer will forward your case to an underwriter, a specialist entrusted with assessing your risk. The underwriter can contact you to ask more questions.
Types of life insurance underwriting
When shopping for an immediate life insurance policy, you may come across terminology like “automated underwriting,” “accelerated underwriting,” and “simplified issue,” which often imply the same thing.
Automated underwriting refers to the absence of human intervention in the approval process.
Accelerated underwriting refers to a faster application procedure achieved via the use of algorithms and more data points.
Simplified issue underwriting typically employs fewer data points than expedited underwriting to determine whether to issue a policy and how much you’ll pay.
In general, policies that employ more data can offer more competitively priced policies with greater coverage. If the insurance just considers a few data points while assessing risk, the best rates may not be available.
Instant life insurance with an exam
Some firms use rapid underwriting to expedite the application process, but they reserve the right to need a medical test if necessary. This implies you may be authorized immediately or required to complete more procedures before receiving an answer. Applicants who are hurried through the procedure without taking an exam are charged the same amount and obtain the same product as those who do.
Tips for buying an instant life insurance policy
If you need life insurance right now or wish to avoid the medical test, consider a quick life policy.
To ensure you’re buying the correct coverage, keep these suggestions in mind:
- Decide on the length and extent of coverage. Before applying, figure out how much life insurance you need and how long you want it to last. This may limit your selections because some insurers only offer limited term periods or modest instant contracts.
- Be realistic about your prospects of being approved. In general, quick life insurance is available to healthy candidates who live a cautious lifestyle. If you have a pre-existing health condition, dangerous work, or a bad driving record and want to acquire life insurance, you should look at traditional policies.
- Examine policy aspects. Are you looking to tailor your coverage with life insurance riders, or do you want the possibility of converting to a permanent policy later on? If that’s the case, consider these aspects while making your pick.
- Shop around. Premiums are likely to vary greatly because some use more data than others to establish eligibility and pricing. Before purchasing life insurance, it is generally a good idea to compare rates.
