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Buying life insurance online from the banks


I’d like this post to serve as a warning to anyone purchasing life insurance online, directly from the banks. I’ve had a bit of experience with them while inquiring about claims, and have found the experience most unpleasant.

I occasionally do policy searches for clients, where I call over 100 life insurance companies. In doing so, I get a pretty good overview of what it might be like to deal with a life insurance claim.  I recently went through this process, and found a marked difference amongst companies.

Most (really, all) life insurance companies were easy to deal with. I called their toll free number, explained the situation and was provided an answer.  In all cases but one my emails and voice mails were responded to pleasantly within 1 business day.  Life insurance companies take the business  of life insurance claims seriously and professionally.

My experience at the banks’ direct online life insurance polices was markedly different.  Here’s an outline of my experience in trying to determine if a policy was in force with the company:

  • I called the company and was put on hold for an extended period of time.
  • I was eventually transferred through to a customer service rep.  The rep was not fluent in English, throughout the call I had difficulty understanding them, and they had difficulty understanding me.  That’s a bit frustrating to start with, and I expect would be made worse if trying to deal with an actual death claim.
  • I asked if they had a policy in force for an individual.   The rep told me I would have to fax all the paperwork in to their claims department.  He then said someone would contact me in a few days. I’m not even sure I have access to a fax machine.
  • I repeated my question about trying to determine if there was a policy in force, and the rep repeated that I had to fax the documents in.  He then indicated that there’s no way for me to speak directly to the claims department, I was to fax the documents in and wait.  (I really detest these ‘one-way’ phone policies).
  • I then re-clarified that I wasn’t filing a claim – that again, I just wanted to know if a policy exists.  The rep finally seemed to understand, and did a search.

This is not an isolated incident.  I have done these policy searches across  a number of times and had similiar experiences with the same group of companies.

The difference?  I’d like to say it’s ‘the banks’.  But it’s not – it’s insurance companies that sell directly online without a broker as the general category.  And the reason for this level of service is that you must deal with a call center, not a claims department.  The call center acts as a shield for the claims center, so you get to fax into a black hole and pray.  With a traditional life insurance company you can call their toll free number and get put through to the claims department and deal directly with them.  That’s a world of difference, and even more exaggerated I suspect if you’re dealing with the loss during all of this.

I have assisted consumers with claims who purchased life insurance online and from TV commercials, but as long as the company had a traditional claims department, I was able to navigate through and get the claim paid promptly.  I don’t know what I’d do if a consumer contacted me for assistance with a claim from a direct-written bank policy like described above.  I’m not sure anyone would be able to assist in a case like that.

Wrongful or criminal deception intended to result in financial or personal gain.


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