Here are key differences:
- Value: in pay-as-you-go life insurance, the price you pay is calculated based on who you are right now. Traditional insurance meanwhile looks at who you might be in a decade or two and that explains the huge difference in monthly fees.
- Ease of application: this much talked about pay-as-you-go insurance in U.K. also makes it easier for you to process your application. A traditional life insurance can easily take more than an hour while the pay-as-you-go system takes less than five minutes, everything done online, with four or five underwriting questions for approval. Traditional insurance requires more than a hundred underwriting questions and application is done both online and offline.
- Pricing and Payouts: pay-as-you-go offers flexible payouts and it features risk pricing so you pay the right amount each year. Unlike traditional insurance which features fixed payouts and average pricing, causing you to overpay in the first few years.
This kind of insurance works great for people in their 20s and 30s. It can even pass for a good insurance for employees with dependents because the dependents can also apply for this reasonably-priced insurance plan.