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A step-by-step guide to buying life insurance

by Sam Stilson
10 min read

Aside from helping more Canadians get personalized life insurance coverage at great prices, one of PolicyAdvisor’s main goals is to change the way life insurance policies are sold.

The insurance industry is slow to adopt new technologies, embrace the internet and adjust its messaging to match a new generation of customers. What feels safe, smart and honest to our parents doesn’t hit our ears in the same way, and workflows that made sense twenty years ago, seem archaic today.

So we are adopting a different approach.

We present everything in an honest and straightforward manner. No sales pitch. No pulling heartstrings. No confusing industry talk. Just simple, smart advice.

We think it’s a quicker, cheaper and all around better approach to buying and selling life insurance. But instead of telling you how great our product is, why not show you the difference?

Let’s walk through the process of buying life insurance using the traditional model and then compare it to our way of doing things.

Step 1 For Buying Life Insurance: Finding an insurance company

The first step most people take in the old school approach to buying insurance is contacting their friendly, local financial advisor to help them start searching for coverage.

Actually, hold on… let’s back up.

Step 0 For Buying Life Insurance: Finding a financial advisor

Finding insurance

The old way:

Because buying insurance can be such a headache, many hire a financial advisor to help them find the best products to suit their needs and explain the process of getting insured in simpler terms. This typically requires asking friends and family for referrals, scouring the internet for local brokers, or randomly cold-calling financial advisors and taking the first appointment available. However, finding an insurance advisor should be like buying a pair of shoes: you want to be comfortable with them above all else, so expect to try a few on before settling.

Time spent: Anywhere from days to weeks

The PolicyAdvisor way:

As for PolicyAdvisor, well, you already found us. 😊

Time spent:
You’re way ahead of the game.

Now, where were we?

Step 1 For Buying Life Insurance redux: Finding an insurance company

Insurance company brochures

The old way:

In the old model, before the internet, getting a true perspective on the insurance industry was tough. Your options for life insurance were limited to the providers in your area or in the rolodex of your financial advisor.

Now, with the power of the world wide web at one’s fingertips, brokers and advisors have access to insurers from all over the country. However, with over 150 companies operating in Canada and all selling similar products, it’s common for financial advisors to stick with who they know (or who they are employed by). If it’s a financial advisor’s job is to simplify things, then it’s against their best interests to flood you with choices anyway.

If you opt to search for a provider on your own, you might be tempted to play it safe and just explore the big three providers (the ones with the TV commercials) for coverage, potentially missing out on products that might better suit your needs.

Time spent: Anywhere from days to months.

The PolicyAdvisor way:

At PolicyAdvisor, we’ve already done that research for you. We handpicked the companies we think offer the best insurance policies and are always adding new providers to our database. We looked at their insurance products, their coverage acceptance criteria and their underwriting process. We know their business history, their financial holdings and their rates. We’ve done our research and are happy to share those notes with you. Because we’re completely independent and not owned by any insurance company, you can trust we’re unbiased. We just want you to get insurance you’re happy with; the provider doesn’t matter to us.

Time spent: 5-10 minutes reviewing companies we work with.

Step 2 For Buying Life Insurance: Deciding on coverage options

Insurance confusion

The old way:

Typically an insurance broker or financial advisor will help you create a budget and perform a risk assessment to figure out how much coverage you need and for how long. You are required to meet with or call them, maybe even bring in pay stubs and bill receipts, and work out your coverage needs. They’ll probably present you with a pile of papers outlining their recommendation which you’ll thumb through on a spare evening before booking a follow-up meeting to ask questions.

Time spent: Likely a week or two

The PolicyAdvisor way:

Or you could log onto our site and fill out our insurance needs calculator in a few minutes. Did we mention you can do this in your pyjamas in the middle of the night? It’s all online, free and you don’t need to sign in or create an account. We’ calculate coverage recommendation and let you pick term lengths based on your needs, and present them instantly on our site, not in a duotang folder or long email exchange. Now here’s the best part, if the numbers seem too high or too low, you can adjust them instantly. Try asking your finance guy to recalculate your coverage needs in a matter of seconds, and then again, and again, and maybe one for a $5 million plan, then a $25,000 plan just for fun.

Time spent: 5 minutes answering a few questions. 5 minutes playing with the sliders.

Step 3 For Buying Life Insurance: Picking a policy

Insurance issuance

The old way:

Once you mull over your broker’s advice, you’ll be asked to pick a policy. That’s another meeting or phone call with your broker, which means giving up another afternoon on the weekend or weekday lunch break. The language in these documents can be pretty thick and despite your advisor’s best efforts you might not understand everything on first glance. If you want to take your time and think about it, your broker might get antsy and schedule a follow-up call so they can urge you to make a choice. The pressure mounts.

Time spent: 1-2 days

The PolicyAdvisor way:

On our site, we’ll show you all the policies that match your coverage needs. Then it’s up to you to decide how long you want to compare companies. You can agonize for hours on end, or pick one you like in a few seconds. If you’re confused about anything, PolicyAdvisor Magazine is full of articles explaining insurance in simple, ‘normal people’ terms. If you just want to talk things through with someone, open up our chat service or give us a call and we help you pick the perfect policy. The pressure releases.

Time spent: 5-10 minutes.

Step 4 For Buying Life Insurance: Applying for coverage

Applying for insurance

The old way:

Time to book another meeting! Now that you chose a policy, you need to fill out a lot of paperwork (by hand) and sign a lot of documents. You might even need to fax (!) a few things to your broker, so he can get them over to the insurance company. If you’re lucky, your advisor has mastered time travel and can take you back to the ’90s to find a fax machine.

Time spent: Decades in reverse.

The PolicyAdvisor way:

At PolicyAdvisor, we try to ask you as many questions as we can from the actual insurer’s forms as part of your online application. Depending on your answers, we eliminate asking anything unnecessary to speed up the process. In a couple of minutes you are finished and your answers are securely entered into our database. From there, we need to book a quick phone call with you to review your answers and get your consent to submit an application on your behalf, but we promise it’ll only take ten minutes. This is one of the few steps that unfortunately can’t be moved online at this point.

Time spent: 5-10 minutes.

Step 5 For Buying Life Insurance: Underwriting and medical exams

Medical exams

The old way:

Once the application your broker submitted reaches the insurer, their underwriters review all of your personal data and assess your risk. Often (especially for large coverage amounts) they request a medical exam. The in-person exam typically consists of an at-home visit from a nurse. They’ll take blood and urine samples and conduct medical tests similar to an annual check-up with your GP. Your samples are sent to a lab for testing; based on this data, the underwriters either reject your application or approve it and some would even place you in a risk profile category.

Time spent: Several weeks.

The PolicyAdvisor way:

Unfortunately there’s no way to give blood on the internet (yet), so this step remains the same with us. However, there are some policies we offer that do not require a medical exam. They are usually for policies with lower coverage amounts and shorter terms. We let you know if that’s what you’re buying when we chat on the phone.

Time spent: Several weeks, but potentially less.

Step 6 For Buying Life Insurance: Policy issuance

Picking insurance

The old way:

Once the underwriter completes all his forms and papers, the approved policy document is sent to your broker or advisor, who will then book another meeting with you. You’ll sign any remaining documents and set up a payment plan. Finally, you’ are insured.

Time spent:  1 week

The PolicyAdvisor way:

If you choose a policy through PolicyAdvisor, we send you an e-mail when everything has been approved. If you prefer, we can let you know over the phone, just let us know when to call. If some final signatures are required, we’ll help facilitate that. We’ll also help you set up your payments with your insurer and make sure you’re happy with your purchase.

Time spent: Less than a week

The amount of time it takes to buy life insurance

The “traditional” insurance purchasing process we outlined typically takes from 1 to 4 months, depending on the amount of information required and the speed at which all of the involved parties (including you) can coordinate schedules to complete the necessary steps. Just the underwriting process can take on average from 3 weeks to 2 months based on your requested coverage amount.

At PolicyAdvisor, we try to get your application completed and submitted in a matter of minutes so you only really have to wait for the insurance company underwriters to do their job. We measure our process in weeks, not months.

 

The case for buying life insurance online with PolicyAdvisor

If saving time comparing companies and policy rates, eliminating the need for multiple meetings and phone calls and finding savings on premiums are things you’re interested in, PolicyAdvisor might be right for you.

Start your search for a personalized life insurance policy today.

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