3. Instant Decision/Rapid/Express Underwriting
Online instant life insurance does not require a paramedical exam, phone interview, or medical records, ever. Algorithms are used to provide an immediate decision.
The algorithms check your public records, including your medication prescription and credit histories. Instant approval products are often referred to as either “rapid” or “express.” You can apply without talking to an agent, though you have the option to speak with an agent at any time.
The cost is surprisingly competitive. The price difference can be just 3% to 10% higher than for traditional policies.
Some instant decision products can cost up to 150% more than traditional policies, so it is important to choose the best company.
Instant issue life insurance means you get approved or declined the moment you complete the application. The application takes less than 15 minutes to complete. ACH bank drafts are the preferred payment method, though some companies accept credit cards. After you’ve completed the application, there are no phone interviews or medical records requests. Instant decisions are great — unless you get declined.
Often competitively priced
It’s surprising how inexpensive some instant underwriting products have become. In fact, it’s not unusual for instant issue products to be among the top 10% of the cheapest products available. The reason for the cheap prices is that many instant life products are backed by investment capital firms that focus on growth rather than profits.
No agent needed
It is unusual for a life insurance policy to be sold without an agent being involved. Agents act as the front-line underwriter to verify that the applicant is a real person. They vouch for applications and are responsible for mistakes on the application. For these reasons, agents are required to have active insurance licenses and Errors & Omissions insurance. With instant underwriting products, there are no agents in the actual sales process. Applications are online, and you can complete one by yourself at any time of the day or night. Of course, this poses an increased risk to the insurance companies, but they balance this risk by not having to pay commissions to agents.
No physical exam
It almost goes without saying: Instant issue products are not only fast and easy to apply for, but they also have the benefit of not requiring a physical exam. If you’re looking for a no medical exam life insurance policy, an instant issue policy is the fastest way to get coverage.
Prices can be high
While some instant underwriting products are competitively priced, others cost up to 150% more than policies that involve the traditional underwriting process. Be sure to compare pricing, because some companies advertise the speed and ease of getting a policy and leave out the fact that prices are high. If a product seems to good to be true, check the fine print. Amazing products do exist, but so do those that take advantage of people.
Easy to get declined
Instant underwriting products are extremely risky for insurance companies. They bypass some of the fail-safes built into traditional policies — mainly, the agent and the physical exam. Underwriting decisions are based entirely on the application and public reports. There is no room for interpretation. As a result, if anything on the application or in the public reports is amiss, the insurance company’s usual reaction is to issue a decline.
Be aware that it’s not good to get declined for life insurance. A decline becomes part of your permanent record with the Medical Insurance Bureau. You will need to disclose it on all future applications, and sometimes a decline will disqualify you from being eligible for other life insurance products.
No room for interpretation
Life insurance is not an exact science. This is why it is so difficult for insurance companies to develop algorithms that can accurately determine a person’s life expectancy. Because the instant issue underwriting process is based 100% on algorithms, errors can’t be resolved. If there’s a mistake in any of your public reports, you have no recourse. Once the algorithm makes a decision, you are done.
Few riders and features
Instant decision products are marketed for their speed. To keep costs low, fewer add-ons are offered. Conversion options and living benefits riders are rarely available. Just be aware that instant underwriting products are often stripped of features to save costs.
While most companies that offer these policies have unfamiliar names, you can rest assured that they are backed by A-rated insurance companies. If you are younger than 50, the best options are Bestow and Haven Life. If you are 50 or older, run a quote to see your best options.