To begin, we need to understand what makes a life insurance policy “instant” life insurance. In simplest terms, instant life insurance is an insurance policy that is issued without the usual detailed underwriting process. Normally, life insurance companies want to know the risks they are undertaking when they sign up to insure a life.
Is the person healthy? Do they skydive and do other dangerous activities? Is the potential insured high risk because of family medical history? All the questions about whether to undertake the risk are set out and analyzed by underwriters in the underwriting department at the insurance company. What if you want, for various reasons, to bypass that entire process?
The most common methods to quickly obtain life insurance coverage include joining your employer’s group life insurance or obtaining online quotes that provide coverage within a few minutes of paying the premium. Both offer coverage without all the underwriting requirements involved in individual coverage, and both come at a cost. Both options mean you are getting a life insurance policy that is not tailored to you. These policies also come with many more exclusions (that pesky fine print in policies where insurance companies give themselves loopholes to deny a claim).
When you obtain life insurance through your employer’s existing policy, that group insurance may be referred to as guaranteed issue life insurance. Basically, the insurance company has issued a group life insurance policy to your employer and agrees to allow employees to purchase what are called certificates of coverage under that group policy. These policies also have drawbacks that include terms that can impact your loved one’s claim for benefits.
Key Takeaways
- Instant life insurance offers a quick approval process.
- Approval and a policy are available in minutes, not weeks.
- There’s no medical exam required.
- Potential drawbacks include higher premiums, no coverage options for the elderly and those with preexisting conditions or serious health issues and more unfavorable terms within the policy.
How Does Instant Life Insurance Work?
How does instant life insurance provide approval and coverage within minutes? Is it just as good as a traditional life insurance policy? These are great questions to ask, as the simplified application process can seem too good to be true.
Instant life insurance goes through an accelerated underwriting process where instead of requiring a medical exam, the insurer uses algorithms to evaluate your risk. These algorithms use the information you provide in the application process, including your health history, family medical history, lifestyle habits (smoking or risky activities), and personal details (age, weight, gender, etc.).
Once it’s decided that you meet the eligibility criteria, they’ll send you a quote with the option to activate your policy right away. It’s worth noting that most instant life insurance policies are term life policies that only provide coverage for a set period. Depending on the kind of policy, there are different options available if the insured outlives their term life insurance policy.
Who Should Consider Instant Life Insurance?
Is instant life insurance for you? It may be a great fit if you’re in any of the following conditions.
- Young, healthy individuals are more likely to qualify for instant life insurance. If you’re under 50 and in relatively good health, you may be able to qualify.
- Instant life insurance can come in handy for those needing quick coverage due to planning a major life event like getting married or buying a house. Instant life insurance is an option worth considering if you need coverage quickly.
- If, for some reason, you want to avoid a medical exam, you should consider instant life insurance.
Although application and approval are quick and there’s no medical exam required, there are some cons about instant life insurance that you should consider. The main ones are higher premiums, limited eligibility and more terms within the policy that can lead to claim denials.
How Do You Choose the Right Policy?
Here are some steps you can follow to ensure you’re choosing the best and right life insurance policy for you:
- Assess your coverage needs: What are your financial responsibilities? If they’re high, this can help you determine how much coverage you require. Consider your debt, income replacement, and any future expenses you may incur.
- Compare policies: Don’t just settle on the first instant life insurance quote you receive. Shop around and compare what multiple insurers’ have to offer. Check with your employer, and see what options are available in their group life policies. This will help you find the best combination of coverage, cost, and term length.
- Consider term length: Try to align your policy’s term to your financial responsibilities. For example, you should probably choose a longer term if you have young children who will rely on your income for many years.
- Look into policy riders: Riders are optional add-ons, like accidental death benefits or premium deferral, that can enhance your policy and provide additional coverage and security.
Contact Sinclair Law Firm for Help with Your Instant Life Insurance Policy
Even though their purpose is to protect, insurance companies aren’t always so happy to part ways with your payout. If you’ve been denied a life insurance claim, Sinclair Law Firm is here to help! Our experienced team is ready to assist you with navigating your claim denial or other insurance-related challenges you may be facing. Get in touch today to explore your options and secure the protection you and your loved ones deserve.