What to Expect When Applying for Life Insurance
Read on to learn about what it takes to buy life insurance, including all of the paperwork you'll have to fill out, the feedback you'll receive, and the types of info you need to provide information about yourself and your relatives. The exam is generally conducted by a paramedical professional, as well as your personal and family wellness histories. The more risk you pose to the insurance company, the lower your premiums are likely to be.
Key Takeaways
- when applying for life insurance, the insurer first assesses your risk of death and sets the price accordingly.
- Most life insurance policies require you to take medical questions and submit to a medical exam.
- If you are younger and healthier, premiums will be lower.
- The "no exam" formulation may exist, but it usually carries higher service fees and a lower face value.
- It's vital you tell the truth when applying for a life insurance policy, or your beneficiaries could be declined benefits.
Determining Your Life Insurance Coverage Needs
There are two primary kinds of life insurance (permanent life insurance, which has coverage for the rest of your life, and term life insurance, which covers a pre-set period of time). An insurance broker can instruct you more about your options.
In order to purchase a life insurance policy, you'll need to estimate the amount of funds that your beneficiaries will need to cover after you've died, and the proportion of that amount that you've already secured through personal assets or a group term insurance policy (such as one provided by your employer).
Medical Questions on the Life Insurance Application
You will need to apply for life insurance, and the application will ask you for basic information such as your name, address, and employer. It will also ask for the following information:
- Height
- Weight
- Date of birth
- Lifestyle habits (i.e., smoking, drinking, exercise, extreme sports).
- Health histories of immediate family members.
- Financial details, including your annual income and net worth.
Some insurance companies will accept your responses to health-related questions, such as which medications you take or any surgery you’ve had, on the application. These no-exam life insurance, such as guaranteed issue life insurance and simplified issue life insurance, are usually more expensive and have a lower face value than insurance that requires a medical exam.
The Life Insurance Medical Exam
Most industries and institutions require an in-person examination as part of their online enrollment. A life insurance agent will arrange for a paramedical (a licensed physician hired by the insurance company) to meet you at your home, office, or clinic chosen by the insurance company.
During the visit, the paramedical will likely undergo an examination:
- Take your medical history (including medical conditions, surgeries, and any prescription medications)
- Ask about your immediate family's medical history
- Take your blood pressure
- Listen to your heartbeat
- Check your height and weight
- Draw a blood sample
- Get a urine sample
Lifestyle habits may affect the way you feel (e.g., exercise, smoking, drinking, recreational drug use, frequent travel, high-risk hobbies).
You may need to take further tests according to your age, the type of policy you have, and the amount of coverage you're applying for. Additional tests may include an EKG, a chest x-ray, or a treadmill test, for example.
An underwriter at the insurance company will review your application and medical exam results. They may order medical records from your physician if necessary to gain more information about the medical conditions you have treated and any treatment you have had. This information helps them determine whether your risk is large from the company's standpoint and how much they'll be expected to cover for your health benefits.
Once your application and physical exam have been reviewed, the insurance provider will either approve or decline your application to purchase medical coverage. This process usually takes weeks or even months, depending on when you submitted a complete application, how long it takes to get lab results, if you request information from your doctor, and much more.
If Your Coverage Is Denied
If you are denied health insurance or are offered it at a higher rate because of the results of your medical exam, you have a few options. Group term life insurance may be available through your employer, which ordinarily does not need a medical exam, ask your insurance company if a company will work with your particular medical condition, or try for a no-exam policy.
If you are offered a life insurance plan but aren't pleased with the rate, you will be allowed to buy it at the moment and renegotiate it at a later time, with the aim of enhancing your health. Also, you can ask more than one life insurance business for the same objective.
Ways to Reduce Your Life Insurance Premium
While you're unable to alter any of the three major factors that influence your insurance premium (the state of your health, age, and family background), there are still things you can do to influence the third relevant lifestyle factor. You could save on auto insurance if you lowered your premium:
Quit smoking: If you never partake of tobacco products, the life insurance company will have more time to collect your premiums.
Lose weight: Weight loss lowers low-density lipoprotein cholesterol, blood pressure, and the risk of developing diabetes. All the improvements to your health can lead to a better risk profile.
Reduce or eliminate your alcohol intake: Drinking can lead to poor health. Life insurers will review your application, driving record, and medical exam in order to develop a picture of your drinking habits. Decreasing the amount or ceasing drinking altogether is beneficial for the financial well-being of the company and might entitle you to a lower premium.
Improve your driving: If you have multiple moving violations, your auto insurance policy can be increased.
Switching from permanent to term life insurance.
Switching insurers: If you plan to live a long time, term insurance may be more appropriate for you than a long-term plan. Make sure you understand the terms of your existing coverage before reconfiguring it.
Eliminating riders: It is possible to obtain similar coverage at a lower price.
Accidental death benefit rider: Riders are an optional benefit riders that pay extra money to you or your beneficiaries. Types of riders include the following.
Children's term life insurance rider: Your beneficiaries will be compensated for a death resulting from an accident if your medical condition boils down to a terminal illness or long-term care or nursing home services.
Waiver of premium rider: Your insurance policy premium will get paid in the event that you become permanently and totally disabled.
Living benefits rider: A portion of your benefit payment will be paid in the form of a cash advance in the event that you receive a diagnosis of terminal illness or before the insurance benefit payment is made.
Payor rider: You may be exempt from premiums should you become deceased or disabled before your covered dependent child reaches a certain age.
Looking for "no-load" or "low-load" policies: Insurance agents usually bill a flat fee rather than asking for a large commission.
Asking about payment discounts: Insurance agents typically offer you policies that are competitively priced and devoid of entry fees.
Reviewing your credit report: Insurance companies may review your credit report to determine your premium. Paying your bills on time, which is noted on your report, assures the insurance company that you will pay your premium on time and in full.
Choosing a company that has experience covering people with your condition: If you have a medical condition, a broker can help you find a company that is likely to work with you and can also provide a better rate.
Reviewing your Medical Information Bureau file: Insurance companies share information about your medical condition through the Medical Information Bureau website. If you would like to review your file and want to make sure that the information is correct, request that the MIB send you a copy of it free of charge. Incorrect data may affect your premium.
When Does My Doctor Fill out a Life Insurance Questionnaire for Me?
Many life insurance companies will want to see your doctor's office in order to gain access to your medical records. Your doctor's office will also use a medical questionnaire with short, readily quantifiable questions. The doctor may also be asked to provide a statement verifying the authenticity of these documents.
Why Is an Applicant’s Signature Required on a Life Insurance Application?
It is considered a fraud if you falsify or knowingly falsify information on your life insurance application. By signing the policy, you affirm that all the information in the application was correct and true.
What Is the Minimum Age at Which a Person Can Sign a Life Insurance Application?
Life insurance apps will vary by location, but the minimum age at which a potential customer can officially sign the application varies by state. In Washington, those aged 15 and older must sign the application no matter where they live.
What Are the Requirements for Taking a Life Insurance Policy on Someone Else?
In order to take out a life insurance policy on someone else, you need to be able to show that there is an insurable interest in that person. This requires proof that an individual or party would experience financial or other hardships as a result of the death of a person.
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