Beware of Buying Life Insurance Online

Many people looking for life insurance turn to the Internet for assistance – but that may not be the best way to get the policy that’s right for you.

Companies now give free life insurance quotes on the Internet, and some even offer advice on your life-insurance needs – if they’re able to do that without a complete understanding of your financial situation and goals, that is.

It also appears easy to compare – one popular website has more than 1,600 policies in its database – and safe: You can compare insurance companies by their Standard & Poor’s and A.M. Best ratings, which reflect different insurance companies’ abilities to pay their claims.

But Caveat Emptor (Buyer Beware). There’s more to selecting the right insurance policy than comparing online quotes. And the fact that there is such a wide choice can easily get you into the wrong product. Term life insurance, for example, provides your heirs with money for a specific term (such as 10 or 20 years) in the event of your death; permanent life insurance offers the same benefit, but with lifetime coverage.

The permanent life insurance category includes whole life insurance and universal life insurance. With whole life insurance, your insurance company puts part of your premiums in a bank account, increasing its “cash value,” which you can borrow against (or receive when surrendering your policy.) Universal life insurance offers many options, such as changing your death benefit and paying your premiums at any time and in any amount (subject to certain limits).

Which is best for you? Instead of relying on an impersonal website, discuss options with your own advisor who understands your individual financial circumstances and goals, and is able to help you select a policy that best meets your needs.

Life insurance is too important a product to leave to the Internet. Even today, nothing replaces the human touch.