Life insurance is one of the most important insurance products you can get. If you have loved ones who rely on your income, it could help protect your family from potential financial devastation if you pass away.
Since it's so important, you may be worried about whether online life insurance is legitimate. After all, while it's convenient to buy life insurance online, you need to be able to trust that the insurance company will pay out a benefit in the event of your death.
The good news is, it's entirely possible to get an excellent policy online from some of the best life insurance companies — as long as you do your research first. Here's what you need to know.
Does buying life insurance make sense for you?
Before you make the choice to purchase a life insurance policy online, you need to decide whether this type of insurance makes sense for your situation.
Life insurance serves an important function for many people. If you have anyone counting on your earnings, getting a policy can offer some valuable peace of mind and financial protection. For instance, if you're married, have children, or have joint debt with someone else, then someone is counting on your income.
If you are younger and don't yet have a mortgage or a family, it could still make sense to buy life insurance. You might opt to apply for a policy to cover final expenses so your loved ones won't have to worry about paying for funeral and burial expenses if you die. Or you could buy life insurance before you have a mortgage or family responsibilities because it's cheaper to get covered when you're younger.
If you think you may need coverage in the future, buying it earlier could help you pay lower premiums for life. You may also avoid the risk of being denied coverage later if you develop a pre-existing condition.
What you need to know about buying life insurance online
If you've decided you need life insurance, you'll have a few different options for buying it. You could choose to work with a life insurance agent or buy life insurance online.
Shopping for coverage online tends to be convenient because you can research many different companies and make the purchase on your own time. But you need to be sure the policy you’re considering provides the coverage you want and that the insurer is legit.
The good news is, it's simple to research your options and find an affordable, comprehensive life insurance policy online.
How to evaluate different online life insurers
There are two main things to consider when you evaluate online life insurance companies:
- Whether the company is a trusted, reliable one
- Whether they offer the coverage you need at an affordable price
The National Association of Insurance Commissioners is a good place to start when you’re researching online life insurers. The NAIC tracks consumer complaints in its database of insurance companies. You can then use this database to view the complaints filed against an insurer and see how it compares to competitors. A company with more complaints than average might not be the best choice.
You can also view each insurance company's ratings from AM Best Rating Services. These ratings provide insight into how financially sound the insurer is. You’ll want to make sure any insurance company you buy from is in good financial shape. If an insurer is financially sound, you probably won't need to worry as much about its ability to pay out your death benefit if you die while your policy is in effect.
A company with a few complaints and a good AM Best Rating and might be worth considering as long as they offer the type of life insurance you want and their policies are priced competitively.
Term vs. whole life coverage
You'll need to decide on the type of life insurance you want, as some online life insurance companies offer term life coverage only, rather than a choice of term life or whole life.
Term life policies offer coverage for a set period of time, and premiums tend to be lower than what you might get with whole life coverage. Whole life policies are in effect indefinitely, so premiums are typically more expensive for policyholders. There’s often an investment component to whole life policies, too. Your whole life policy accrues a cash value, so it serves as a type of savings vehicle rather than just insurance.
Term life insurance policies are typically much more affordable than whole life coverage. They can provide a better value to many people and often provide sufficient coverage. If you're buying term life, you'll typically have a broader choice of online insurers you can work with to purchase coverage. While whole life policies are still available, it may take more shopping around to find an online insurer.
Although you may be able to research insurance companies and even submit an application online, some online insurers still may require you to complete part of the process in person. That part is the medical exam.
While some insurers no longer require a medical exam, many life insurers do require that you undergo a medical exam so they can assess your health status when you apply for coverage. Insurers want to know your physical condition so they can determine the likelihood you'll pass away while covered.
An insurance medical exam won't cost you anything — the insurance company pays for it. The exam is similar to a typical physical. The medical provider conducting the exam will check things such as your glucose and cholesterol levels, blood pressure, HIV and hepatitis status, and whether you use nicotine or recreational drugs. They may also ask you questions about any current medical conditions and your medical history.
Although life insurance medical exams used to be standard for almost all policies, a growing number of online life insurers, like Bestow, now offer an easier alternative that enables many people to get covered without an exam. These insurers use publicly available data and algorithms to assess your health status rather than requiring an exam.
If you’d rather forgo the medical exam when you apply for life insurance, you'll need to narrow your search to insurers that have adopted this innovative approach.
How to buy life insurance online
If you want to apply for life insurance online, here are some steps you’ll likely need to take before you can secure coverage:
- Figure out how much life insurance coverage you need: It’s important to know the amount of coverage you're looking for before you start shopping around. Experts often recommend getting a policy equal to 10 or 15 times your annual income.
- Compare life insurance rates: Insurance premiums vary by company. Comparison shop online and get life insurance quotes from several different insurers. Be sure the policies you compare are similar in terms of what they cover and the death benefit payouts they'll provide.
- Decide how long you want coverage: As mentioned, there are different life insurance options. With a permanent policy or whole life policy, you're typically covered for life. Term life insurance offers different term lengths based on your needs.
- Determine your coverage eligibility: Different insurance companies have their own eligibility rules. For example, some have stricter age limits than others.
- Assess company health: Consider AM Best ratings and review the NAIC database of complaints as you’re shopping around for coverage.
- Choose the company that meets your needs: A company's premiums, qualification requirements, and ratings are also important considerations.
- Go through the application process: After deciding which insurer is right for you, submit an application. Be aware that even if you can complete the application online, you might need to undergo an in-person medical exam, depending on the company.
5 popular online life insurance companies
If you're ready to buy life insurance online, here are five popular companies to consider.
Bestow is a company that aims to streamline the process of buying term life coverage. Policies are available for U.S. citizens or permanent residents between the ages of 18 and 59. You can apply for a term life plan with a death benefit ranging from $50,000 to $1,500,000, and premiums start as low as $16/month.
Bestow's best feature is that they use data to determine if you're eligible for coverage, so there's typically no medical exam required. You can get a personalized life insurance quote within minutes, and if approved you can also complete the buying process 100% online.
Bestow just evaluates your eligibility and sells you the policy, though. Policies purchased from Bestow are issued by North American Company for Life and Health Insurance, which has an A+ AM Best rating. That means you'll ultimately be insured by a trusted, well-established insurer with solid financial credentials.
Read our full Bestow review.
Haven also makes it easy to apply for term life insurance online. Policies are available to U.S. citizens under the age of 64, with those under 60 eligible for as much as $3 million in coverage. Those between 60 and 64 are eligible for up to a $1 million death benefit.
Unlike Bestow, Haven Life often requires you to undergo a medical exam — although you may be able to obtain InstantTerm Coverage with no exam and buy up to $1 million in protection if you're under age 59. If you need a medical exam, a trained paramedic comes to you, and it will typically take around 20 minutes. You also have the option to go to an ExamOne or Quest Lab.
Like Bestow, Haven sells policies, and a trusted big-name insurer backs the insurance. In this case, Massachusetts Mutual Life Insurance issues the policies. This top-rated insurer has been in the industry for more than 160 years and is known for its financial stability.
Read our full Haven review.
Ethos provides the opportunity to get same-day coverage with no medical exam. It offers both whole life and term life policies to U.S. citizens and permanent residents, and eligibility requirements vary. You need to be between the ages of 20 and 85 to be eligible for whole life coverage and between the ages of 20 and 65 for term life coverage. The application process is entirely online, and you can usually get an answer within minutes on whether you're approved and how much you'll pay for a policy.
Ethos works with several top-rated insurance companies, including Legal & General America, Ameritas Life Insurance Corp., AAA Life, Principal, and TruStage.
When you submit an application, you'll be given a quote for a variety of different policies. You can pick the one you like, apply in around 10 minutes, and get a quick — and perhaps even instant — decision on approval and premium prices.
Read our full Ethos review.
Fabric specifically caters to parents, making it easy to shop for insurance and create an online will. To be eligible for term life insurance through Fabric, you need to be between the ages of 20 and 60, and a U.S. citizen or permanent resident. You can apply online or via the company's app, and the process takes around 10 minutes. You'll be able to customize the coverage you want and choose from a variety of terms.
When you submit your application, an algorithmic underwriting process determines if you're eligible for coverage or if a medical exam is necessary. Some people qualify without an exam, and it's quick and simple to get a quote and find out if you're one of them.
Fabric's policies are issued by Vantis Life, which is a Penn Mutual company that has an A+ AM Best rating. Penn Mutual was established in 1847 and is the second-oldest mutual life insurance company in the U.S.
Read our full Fabric review.
Ladder makes it easy to buy term life insurance by enabling you to complete the application process online and receive a quick decision. To be eligible for a policy, you need to be between 20 and 60 years old and a U.S. citizen or permanent resident.
Ladder stands apart from competitors because it's designed to help you increase or decrease your coverage directly from your online account. The company refers to this process as "laddering." It can help ensure you always have the right level of coverage as your life changes.
Policies purchased through Ladder are issued by one of three different life insurance companies, each of which has at least an A rating through AM Best. These companies include Fidelity Security Life Insurance, Allianz Life Insurance Company of New York, and Allianz Life Insurance Company of North America.
Read our full Ladder review.
Another option to consider
- Get life insurance that allows you to access funds while you’re alive
- Protect loved ones if a life event, critical, or long term illness happens
- Access 6-7% avg. tax-free returns that can be used for anything
- Top A-rated life insurance companies on their platform
How much does online life insurance cost?
Your life insurance premium payments will vary based on the company you select, coverage options (generally term life or a type of permanent life insurance), your age and health status, and the amount of your death benefit. Term life insurance policies are widely available from online life insurance companies and generally costs less than whole life insurance policies.
When does it make sense to get life insurance?
It can make sense to get life insurance if anyone is currently dependent on your income or might be in the future. The death benefit if you pass away could help cover the cost of jointly held debt and could replace your income for loved ones that rely on you financially.
If you don't currently have family obligations, but you plan to in the future, buying life insurance might still make sense. You'd likely be able to get lower premiums if you purchase a policy when you're young. And you can avoid the risk of developing a pre-existing condition that could make it harder to get covered later.
The bottom line
It's easy to buy life insurance online. Many legitimate companies are offering affordable policies backed by insurers you can trust. By checking NAIC ratings and AM Best Ratings, you can help ensure a trustworthy company provides your coverage. You can also quickly compare life insurance coverage and monthly premiums to find an insurer that meets your needs.
If you’re currently shopping around for coverage, check out our picks for the best life insurance.
Ethos - Life Insurance Benefits
- No medical exams
- Same-day coverage
- Affordable policies
- Honest advice. No up-selling.