The more traditional life insurance sale typically focuses on more affluent individuals. These policies typically feature larger face amounts and emphasize estate protection or business applications. Whether this can be accomplished online without the services of an agent who understands life insurance remains to be seen. Life insurers also are experimenting with the sale of annuities on the Internet. In the traditional distribution of term products, highly competitive premium rates and market-level commissions have driven sales.
Term insurance marketed on the Internet is even more price sensitive.
To generate significant sales from the major quote services, an insurer's premiums generally must fall within the five best rates quoted. The competitiveness of the term insurance market has led many major players to increase their number of preferred underwriting classes. The assessment of expected mortality is the critical factor shaping the premium rate structure. The characteristics of the typical Internet buyer should place many risks among the preferred ranks. Thus, as long as the mortality experience is consistent with the levels expected, price sensitivity will remain a major force.