Buying life insurance online can be quick and convenient. Here are some things to bear in mind.
- No financial advice is given if you decide to buy life insurance online.
- You may not get back the premiums paid if you terminate or surrender your policy early.
- You must make sure the product you choose suits your risk profile and needs.
Buying life insurance usually involves talking to a financial advisory (FA) representative. Before recommending you a suitable life insurance product, your FA representative will undertake a financial needs analysis with you to:
- Understand your insurance objectives
- Risk appetite for investment
- Financial needs
- Personal circumstances
But nowadays, it is possible for you to buy life insurance online in a just few minutes with no advice provided — known as Direct Purchase Insurance (DPI). This means you have to select and assess for yourself a suitable product to buy as you will not be receiving advice and a recommendation from a financial adviser.
DPI are priced without distribution expenses. Hence, you pay lower premiums than on comparable life insurance products.
Assessing your needs
Before you buy a life insurance policy, use these tools to work out your needs, financial goals, and budget:
- Insurance Estimator to calculate the amount of life insurance coverage you would need
- Budget Calculator to check if you can afford the premiums based on your current income and expenses
See also: Assessing your insurance needs
Choose the right policy
The online platform you use to purchase the policy directly will provide the product's information through documents such as the Product Summary, Policy Illustration, Product Highlights Sheet, Cover Page, and Bundled Product Disclosure. Read these documents carefully to make sure that the policy you buy meets your needs.
TipCheck out online portal compareFirst for information on all the life insurance products available to retail consumers, including direct purchase insurance, which are priced without distribution expenses. Use this platform to compare the features and premiums of the different products you are considering.
Once you have decided on a product, you will also have to answer a series of questions. These include:
- Health/medical conditions
- How much insurance you need, and for how long (if you are purchasing term insurance)
NoteBuying life insurance is a long-term commitment. Take the time to consider the questions and answer them carefully. Avoid making a decision in haste. Not answering questions on your health and medical conditions truthfully, for example, could lead to your policy being voided when you need it.
Know what you're buying
Before completing the purchase online, you will need to acknowledge that you have:
- Read and understood the Policy Illustration and product summary, including any exclusion of coverage
- Disclosed fully and truthfully all information requested in the application form and any supplementary questionnaire(s)
If medical and moratorium or financial underwriting is required, you will have to acknowledge that you have declared:
- All pre-existing medical conditions
- All existing life policies that you own, or are in the process of applying for
- Your current financial situation (e.g. your income)
If you have minor pre-existing conditions, some insurers offer a moratorium underwriting option to cover these conditions.
See also: Interpreting your insurance documents
Things to note
- A life policy is not a savings account or deposit.
- You may not get back the premiums paid (partially or in full) if you terminate or surrender your policy early.
- Some benefits of a life policy may not be guaranteed.
- There is a 14-day free-look period where you can cancel your policy, and get your premiums refunded to you, less the medical and other expenses which the insurance company has had to pay.
- You can request for an FA representative to tell you if the life policy you're considering is suitable for you, and explain the product features.
- If you choose not to seek advice on the suitability of the policy, you must decide for yourself if the life policy is suitable for your financial circumstances and needs.