Everything You Were Afraid To Ask About Getting Great Online Term Insurance?
April 8, 2009
I’d like to spend a few moments discussing shopping for affordable online term insurance. Since it can be a tricky subject, I don’t tend to write a lot about the “do it yourself” online term insurance business. Since there is a permanent need for most people, I tend to write a lot about permanent insurance. I know that some people won’t buy permanent insurance though. Either, they don’t see the need, or they they don’t understand it.
Whatever the reasons, I wanted to talk a bit about it. If you’re going to buy it, you might as well understand the fundamentals.
Term insurance rates have come down tremendously in the last few years. This is largely due to modernization and medical advancements. Advances in medicine mean longer lifespans and longer time horizons for insurance companies to invest those premium dollars.
In fact, the most popular buyers of life insurance, which are age 25 to 44, have seen their chance of death drop 10%!
By making airbags standard, improving crumple zones and strengthening side impact beams, fatalities – as well as insurance rates – have gone down. Early detection of potentially life threatening illness also help to drive down the cost. Additionally, there is competition driving down the costs of insurance. The Internet makes it incredibly easy to think about great online term insurance rates and since you can buy most types of term policies either by phone or over the ‘net, there’s incentive for insurance companies to be competitive in their pricing.
The increases in lifespan has produced an interesting side-effect. Most term policies don’t pay a claim because the insured outlives the term. So insurance companies can afford to lower their online term insurance and hope that they can make up for it in their lapse rate or “the float” (the money they make by investing their reserves that are not yet paid out as claims).
I can totally see how this can cause a buying frenzy, and since the Government is willing to back up consumers with a State Guarantee Fund and lots of associated regulations, consumers have generally been care-free about who they buy their insurance from. After all, once you buy the policy, the rate is the rate and as long as it is from a fairly large insurance company (which is what substantially all of the quote engines run these days), people just don’t worry about whether the money will be there when they need it. The presumption is: it will be there because it has to be there.
Many people, as a result, are price driven and are not as concerned about the fundamentals of the company.
Even still, it’s a good idea to be concerned with the strength of the company. This will give you a good idea of whether or not the company can even afford to pay their claims. After all, what good is a good deal if your family is left “holding the bag” (an empty bag at that)?
Read helpful information in the topic of auto loan calculator – your own knowledge base.
Comments
Got something to say?