Instant Life Insurance: What Is It and How Does It Work?

Applying for a traditional life insurance plan often takes weeks, and that can feel like a lifetime to modern consumers used to purchasing products and services with the click of a button. If you need a policy sooner, you may want to consider instant life insurance, which is often issued in minutes. In this article, you’ll learn how instant life coverage works and what you can expect during the application process.

What Is Instant Life Coverage?

Instant life insurance, which is sometimes referred to as instant decision life insurance or fast life insurance, is coverage that’s issued quickly, usually through a process known as accelerated underwriting. Although this process evaluates the same risk factors as a traditional life insurance plan, it uses numerous data points and advanced algorithms to speed up the evaluation. Plus, it’s typically automated so there’s no human involvement.

Instant decision policies are often purchased online or over the phone and usually don’t require assistance from an agent or a broker. You’ll typically have to answer a series of questions about your health, lifestyle and other factors that may affect your risk of death. This information, when combined with data retrieved from multiple industry databases, lets the insurance company assess your eligibility so they can approve or deny your policy request in minutes.

For most insurance companies, instant life coverage takes the form of a term life insurance plan, which can be purchased in five-year increments, typically spanning 10 to 30 years. The amount of coverage you qualify for and the cost of premiums depend, in part, on the outcome of the accelerated underwriting process.

How Does Instant Life Insurance Work?

Most consumers apply for instant life insurance online, and the process is usually quick and contactless. Some companies may also accept applications over the phone. Regardless of the mode of application, the process typically involves the following steps:

You’ll answer a series of questions designed to create a comprehensive picture of your risk profile. These questions may concern your overall health, lifestyle, income and family medical history, and should be answered honestly. Dishonest answers may result in a nonpayment of the policy’s death benefit if you die.
After receiving your consent, the company retrieves additional information about you from multiple databases and other sources of personal records. This may include:

Credit scores
Insurance history
Criminal records
Bankruptcies
Medical records, including prescriptions and lab work
Motor vehicle history and driving violations

This information and your evidence of insurability is assessed to determine if you’re eligible for coverage. This part of the process is often fully automated and invisible to the consumer.
Your eligibility decision is returned in minutes. You should receive one of three possible decisions: approval, denial or referral to the underwriter.
The next steps depend on the decision you’ve received.

Approval: If you’ve been approved, you’ll need to sign the paperwork, choose a beneficiary or beneficiaries and begin paying premiums for the policy to go into effect. Premiums may vary widely among companies, depending on the complexity of their underwriting process. Insurers who use numerous data points to more accurately assess risk typically offer the most competitive rates.
Referral to the underwriter: If you’ve been referred to the underwriter, you may need to answer additional questions or provide more information before a decision can be made. At this time, the company may also request a medical examination to help determine eligibility.
Denial: If your application is denied, it doesn’t mean you won’t qualify for a life insurance policy. It may just mean you need to pursue more traditional coverage that includes a full underwriting process.

Does Instant Decision Life Insurance Ever Require a Medical Exam?

It depends on the guidelines a company has in place. If you've been referred to the underwriter after your initial assessment, you may be required to undergo a medical exam before approval can be issued. Even if you’ve received instant approval, some companies still reserve the right to request a formal medical examination. Policy approval may be contingent upon the results of this exam.

Does Instant Life Insurance Coverage Start Immediately?

Even if your policy is approved quickly, many companies include an initial waiting period before coverage begins. If the insured dies during this timeframe, which may be as long as four or five years, no death benefit is paid out.

The waiting period is designed to minimize insurance fraud and to maintain the financial viability of insurance companies, protecting them from paying out death benefits on policies that consumers haven’t yet paid premiums on. Specifics of the waiting period should be outlined in the policy documents, and premiums must still be paid during this time.

Some companies do offer plans with no waiting periods, although you may have to shop around to find one, and these policies typically have substantially higher premiums.

Do Instant Life Plans Have Coverage Exceptions?

Yes. Similar to traditional life insurance plans, no-wait policies almost always have coverage exceptions written into them. These exceptions are situations in which the company may legally refuse to pay out the death benefit.

The following list includes common life insurance coverage exceptions:

Suicide
Homicide involving a beneficiary or related party
Participation in extreme sports and other high-risk pastimes
Involvement in criminal activities, especially if they include the use of firearms
Misrepresentations or falsehoods on the initial insurance application
Use of alcohol, illegal drugs or prescription medications that have not been prescribed by the insured's physician

More information on specific coverage exceptions and how they affect the death benefit may be found in the contractual terms of your policy.

When Should I Contact My Insurance Agent?

Although consumers may easily initiate the purchase of instant-decision life insurance directly through the issuing company, your insurance agent may still be able to help. A licensed agent, financial advisor or other trained industry professional can help you navigate available options to find a suitable life insurance policy with a reputable insurance agency. Whether you have questions about your current policy or a plan you're considering, a trusted industry professional can help you get the answers you need.