How to buy life insurance online

5 min Read Published: 23 Mar 2022

How to buy life insurance onlineIn this article, we explore the different ways that you can buy life insurance online, as well as how the process works and an alternative way to buy life insurance where you can get up to £100 cashback.

What is life insurance?

Life insurance is a type of personal insurance that pays out if the insured person dies. It provides peace of mind and financial protection for anyone whose death would cause financial loss by paying a lump sum of money or a regular income to settle financial obligations and replace lost income and revenues.

Most personal life insurance policies are bought by people who wish to protect their families from the hardship they would endure if they were to lose their financial support and income. Often, large financial commitments like taking on a mortgage or starting a family are the catalyst for buying life insurance. However, individuals' needs and concerns vary and life insurance can and should be tailored to suit the particular concerns of people in different situations.

Which types of life insurance can you buy online?

While you can get life insurance quotes online, depending on your health, lifestyle and occupation, you may find that you're unable to complete the entire buying process online. Here are some types of life insurance you will commonly find online:

Term life insurance: this type of life insurance pays a sum of money if you die within the term which is the number of years that you've chosen to be covered for and includes mortgage life insurance and level term life insurance.

Over 50s / Funeral Plans: this type of life insurance is usually limited to a smaller payout of up to £20,000 and is designed to cover the cost of a funeral when you die as it covers you for the whole of your life.

Online processes are usually simple to use but can limit your ability to tailor or personalise the life insurance for your particular needs and budget - we explain the benefits and limitations below.

Best ways to buy life insurance online

Life insurance is available to buy online with:

  • Comparison websites
  • Insurance providers
  • Banks
  • Supermarkets
  • Life insurance brokers

Some will allow you to complete your purchase online while others merely provide you with a quotation before prompting you to speak to someone to complete your purchase.

Buying life insurance online - what to look out for

Buying any product or service online can put you in the driving seat and allow you to read information and search options at your own pace and comfort. If you are making decisions with your family or partner, it can be easier to work through information online together whilst discussing your priorities and agreeing on what you need. However, buying life insurance online can be confusing and some websites provide limited options making the process slightly restrictive so consider the following before finalising your choices:

Price increases for health, occupation and lifestyle

Insurance companies have unique ways in which they assess applications and some are more lenient than others so selecting the cheapest life insurance company may not put you with the fairest insurance company in terms of how they assess your health and lifestyle.

Certain health conditions, manual jobs and hobbies that you are asked about when you apply for life insurance can prompt the life insurance company to add an extra cost for the extra risk judged by their unique guidelines. Often we find that the fairer companies are not the cheapest at the quote stage but can be significantly cheaper after you apply for your life cover.

The small print

Many insurance policies carry the same product name, but when you look under the bonnet you'll find that there are subtle differences. With life insurance, the small print can often reveal restrictions and caveats to the cover they provide but also some added benefits that you may not appreciate when buying online as they may be hidden in the terms and conditions statements. Even when you do click on the small print, a large amount of technical jargon can prevent you from deciphering exactly what you are buying.

For example: terminal illness benefit pays your death benefit early if you are diagnosed with a terminal illness and your life expectancy is 12 months or less - it is usually included free of charge with your life insurance. Critical illness benefit, on the other hand, pays out a lump sum of money if you are diagnosed with one of the illnesses that are covered in the benefit terms and pays out even if you survive but will cost more to add to your life insurance policy. It would be easy to confuse these two benefits due to the similar terminology used to describe them.

Gift card and cashback incentives

Many companies use gift cards and cashback incentives to persuade you to buy their life insurance policies and often a £100 gift card or the promise of some cashback can be enticing but these incentives are usually priced into the product. It is wise to compare the difference in cost between the cheapest price you can find and the one that offers you an incentive to work out whether you're paying more for the incentive than it is worth. You can read more about how to navigate such incentives in our articles, "Life insurance with cashback" and "Over 50s life insurance: We rank the best FREE gifts"

Customer service and claims support

Buying your life insurance online usually makes you responsible for making choices; pursuing your application (sometimes a lengthy and difficult process if you have health concerns) and making claims. If you don't have an adviser or broker that provides ongoing support, you'll have to deal with the insurance company yourself and most people do not have the necessary knowledge to do this effectively. Additionally, if you find yourself in a situation where your application or claim is declined, the support of an adviser can be invaluable in determining whether the decision can be challenged and good advisers will do this on your behalf without charging you a penny.

Payout rates

Most life insurance companies publish their claims statistics so that you can see what percentage of the claims that they received were paid out before you make your decision.

Trusts and nominating your beneficiaries

Whichever route you choose to buy your life insurance, do make sure that you nominate the people you would like the claim money to be paid to in case you die. Without completing the necessary forms (trust forms), the money from your life insurance policy could end up with people you never intended to benefit and may become liable for inheritance tax which could reduce the value of the payout by up to 40%.

Is buying life insurance online the best way to buy it?

Online is a great place to start if you're looking to buy life insurance. There is plenty of information and guidance that can get you thinking about what you want and how to get it. You can also start looking at monthly premiums and work out how much you may need to budget for the life cover you need. However, few online platforms that sell life insurance give you a fully online experience when it comes to buying life insurance.

While speaking to a life insurance adviser* may not be ideal if you prefer to buy online, the benefits are too important to ignore. You'll receive bespoke advice, free of charge; help with your application and claims; ways to reduce your monthly premium while addressing your priorities and they'll organise the trust forms that allow you to nominate your beneficiaries and avoid inheritance tax.

You can contact a specialist life insurance broker* that does all of the above without any obligation to buy but as a Money to the Masses reader you'll get up to £100 cashback if you do.

If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. This link can be used if you do not wish to help Money to the Masses and do not wish to qualify for the cashback referred to in the article