The short answer
Buying term life insurance from an app can be a perfectly good way to get covered, as long as you pick the right amount and the right length of term first. That question came up this week because SoFi and Prudential announced on October 21 that SoFi members can now get a quote, apply for, and buy Prudential term life coverage right inside the SoFi app, often in minutes and often without a medical exam, according to the companies' announcement on Business Wire.
What happened this week
The announcement says more than 15 million SoFi members can now explore term life coverage, get an instant quote, and apply in one place without leaving the app. Prudential also pointed to a report from LIMRA and Life Happens that found nearly 100 million Americans say they are uninsured or underinsured when it comes to life insurance.
That number is the real story for me. A lot of folks I talk with, especially people who work for themselves, have no life insurance through a job. If an app nudges them to finally look, that's a good thing.
Why fast doesn't always mean right
Speed is nice. The part that takes real thought is the amount and the term length. Those two choices decide whether the policy actually does its job for your family.
Here's how I think about it. Picture the years your family would be most stretched without your income. Maybe that's until your youngest finishes school, or until the house is paid off. Your term should cover those years. Your amount should cover what your income pays for during that stretch, plus any debt you'd want cleared.
If you're self-employed, add one more thing. Think about what would happen to your business debts or equipment loans. A banking app's quote tool can't know about your business unless you think it through first.
A few things to check before you buy anywhere
Read the term length and make sure it lines up with the years you actually care about. Check whether the policy can be converted to permanent coverage later, since that matters if your health changes. Look at who you're naming as the beneficiary and keep it current after a marriage, divorce, or new baby.
Also, a no-exam application still asks health questions. Answer them honestly. The insurer reviews your answers and outside data, and a wrong answer can cause trouble when your family needs the policy most.
Where health coverage fits in
Life insurance protects your family if you're gone. Health insurance protects your family's budget while you're here. If you work for yourself, you're buying both on your own, so it helps to look at them together. Marketplace Open Enrollment opens November 1, and I put the Open Enrollment dates for self-employed people in one spot. I also wrote about how self-employed people can deduct health insurance premiums, which is worth reading before tax season.
FAQ
Is it safe to buy life insurance through a banking app?
In this case the coverage itself comes from Prudential, a long-established insurance company, and the app is the way you shop and apply. The bigger risk is buying the wrong amount or term, not the app itself.
Do I need a medical exam to get term life insurance?
Not always. The SoFi and Prudential announcement says many applicants can get coverage without a medical exam or lab work. You'll still answer health questions, and the insurer decides based on your application.
How much life insurance should I get?
A simple starting point is enough to cover the income your family relies on for the years they'd need it, plus debts like a mortgage. Your own budget, kids' ages, and business debts all change the number, so it's worth walking through with someone.
Does life insurance replace health insurance?
No. Life insurance pays your beneficiaries if you pass away. Health insurance helps pay for medical care while you're living. Most families need to think about both.
Can I change my life insurance later?
It depends on the policy. Some term policies let you convert to permanent coverage, and you can always add a second policy later. Check the conversion details before you buy.