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My Blog


Online Insurance Purchases--Convenient, But Not Always as Expected

Posted on November 16, 2015 at 8:19 PM
As more things are done online, the convenience is undeniable.  If you don't have to schedule an appointment to make a purchase, take time out, drive to a location and sit (sometimes uncomfortably) with a stranger, why bother?  If you're an early riser or a night owl, why try to fit your needs within certain work hours?

I had a client ask me a couple of months back to quote her some permanent insurance for her and her spouse.  They were just looking for funeral coverage.  I did my research and got back to her with some quotes.  She thanked me and said she would discuss with her husband, then let me know. 

After 3 weeks had passed, I contacted her and was told they would leave it for now as the cost was higher than she anticipated.  I followed up today to discover that she had purchased  online for both of them and the price she told me was shockingly low for a permanent solution.   

I look at some of these for comparison from time to time and in my mind there was just no way.  I went to the company site she purchased from, input their info and got higher rates than I had quoted.  I looked at the product and they got less options than what I offered.  They would be paying premiums for an extra 7 and 12 years longer than what I had quoted.  Confused by this, I called her again to tell her the numbers I got.  She had one of the policies handy and looked at the details.  She had purchased 10yr terms for both of them.  I asked her to look at the renewal rates in 10yrs (something I discuss with each client who purchases from me), and she was shocked at how much the increase would be.  Not only that, but the product would run out 3 yrs after renewal for her husband as it could not be carried on past age 80.  This product was not convertible to a permanent solution either so they would be stuck with no insurance if they had longevity past age 80. 

His renewal would be 10 times the premium he's paying now.  While not unusual, this is not something they looked at with an online purchase.  They had conveniently purchased this product that does not address their needs the way they expect. I could have also sold them a 10yr term, but the renewal rates would be discussed in detail. Also, I would have sold them a policy with the option to convert to a permanent solution before age 70. The exercising of this option would have been discussed so they won't possibly outlive their coverage.

Am I saying that online purchases are a bad thing?  Of course not.  I have bought things online myself....T-shirts, hats, cell phone cases, airline and concert tickets etc.  There are some things that I won't buy least not without an expert with whom I have established some trust. Vehicles, houses and life insurance (not without knowing the products well). 

When purchasing a vehicle, I need to sit in it and see how I fit.  I needs to feel the layout and the convenience of reaching accessories and pedals.  When purchasing a house, I want to walk in it (or the show-home if building).  I want to get a better sense of layout and feel.  When i'm buying home and auto insurance (I won't use life insurance since this is my wheelhouse), I want to speak with a broker who can explain the product to me. I do not buy online without consultation because I recognize that even though convenient, there are times I need things explained with more detail than offered or put in everyday terms.  For such things, I prefer to speak with someone who can answer my questions.  Again, this works quite well for some and that's great. 

I recognize that this is a personal decision and many will disagree.  There are many who make these purchases and are quite happy that way. I have family members who purchase shoes online and it works quite well for them.  My point is that depending on what you need, this can work well for some.  I have an odd fit so everything needs to be tried on.  While the online purchase would be convenient, it would not properly suit my longer term need...pain, possible blisters etc could be some convenience side effects.  

With insurance, I let my clients know what they're purchasing.  Will it do for you what you need now and down the road?  While this may make a sale take longer, I feel educating my clients with this process works out better for them and for me.  Is that as convenient as buying online?  Definitely not.  Is the time worth the process for something so important?
Let me be clear.  I have participated in online sales with my clients.  It can be an awesome tool for the busy or inconveniently located person. I explain options and help in the proper product selection and placement.  An online platform in such a situation works very well for us, be it someone in a remote location, different city or just too busy to physically get together.
I help clients make the proper, customized purchase for their situation.  I will place insurance that covers the needs now and offers viable options in the future.  This may be less convenient, but it is quite likely you will get a better fit.
I look forward to helping you take care of your insurance or in person.

Categories: Critical Illness Insurance--The RRSP Protector, Insurance-Who Needs It?, Strategic Financial Planning

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