Having life insurance may assist guarantee that your dependents will be able to replace your income with the resources they need in the event of your death. However, how exactly do you go about acquiring protection? What steps can you take to ensure that you obtain the most favorable terms? If you are aware of the steps involved in purchasing life insurance, you will have a better chance of finding affordable coverage that meets your requirements.
Continue reading to get an understanding of the steps involved in purchasing life insurance, from filling out the application through the underwriting process. In most cases, this will need you to fill out some paperwork, submit to a paramedical exam, and provide the medical histories of both yourself and any close family members you have. Your ability to pose less of a threat to the insurance company (which is often connected with younger age and better health) will result in cheaper rates for coverage.
KEY TAKEAWAYS
- When you apply for life insurance, the insurance company will first conduct an assessment of your risk of passing away and will then calculate the premiums for the policy based on their findings.
- The vast majority of life insurance plans will ask you to complete a medical exam and provide answers to health-related questions.
- The lesser your premiums will be, in general, the younger and healthier you are as well.
- There are plans available with “no exam,” but they often have a higher premium and a lower face value.
- During the application procedure, it is imperative that you speak the truth; otherwise, your beneficiaries run the risk of having their claim for a death benefit refused.
How to Figure Out How Much Life Insurance Coverage You Need
There are two primary types of life insurance: permanent life insurance, which offers protection for the whole of your life, and term life insurance, which offers protection for a certain amount of time. You may have a better understanding of your choices with the assistance of a local insurance broker.
After you have made the decision to buy life insurance, the next step is to establish the amount of coverage you require by calculating the difference between the amount your beneficiaries will require in the event of your passing and the amount you already have covered through other means, such as personal assets or group term insurance (such as a policy offered by your employer).
Questions Regarding Your Health on the Application for Life Insurance
You are going to need to submit an application for life insurance. The application will ask for fundamental information like your name and address, as well as the company that you now work for. In addition to this, it will request the following personal information from you:
- Height.
- Weight.
- When you were born.
- Routines in daily life (i.e., smoking, drinking, exercise, extreme sports).
- The medical history of members of one’s immediate family
- Details on your finances, such as your yearly salary and net worth, are required.
It’s crucial, to tell the truth about your weight and any other health difficulties, even though it may be tempting to lie about these things. The insurance provider has the right to raise your premiums, terminate your coverage, or refuse a beneficiary’s claim to the death benefit if it learns that you have misled about a health condition or your lifestyle.
On the application for insurance, some providers may take into consideration your responses to health-related questions, such as which drugs you use and whether or not you’ve ever had surgery. These types of life insurance, which do not need a medical exam, include guaranteed issue life insurance and simplified issue life insurance. These types of insurance are often more costly overall and have a smaller face value than other types of life insurance, which do require an exam.
The Medical Examination for Life Insurance
The vast majority of businesses and insurance plans call for in-person medical examinations. Your life insurance agent will make the necessary arrangements for a paramedical, who is a licensed medical professional who is employed by the insurance company, to meet you at your home, place of business, or clinic that has been chosen by the insurance company.
During the test, the paramedical will most likely do the following tasks:
- Consider your past medical records (including medical conditions, surgeries, and any prescription medications)
Inquire about the medical history of your close family members. - Check your blood pressure regularly.
- Pay attention to the rhythm of your heart.
- Make sure your height and weight are accurate.
- Draw a blood sample
- Get a urine sample
- Inquire about the aspects of your lifestyle that could have an impact on your health (e.g. exercise, smoking, drinking, recreational drug use, frequent travel, high-risk hobbies)
Your age, the kind of coverage you’re looking for, and the quantity of protection you’re trying to purchase all play a role in whether or not you’ll need to take part in extra testing. Additional tests may consist of an electrocardiogram, a chest X-ray, or a test on a treadmill.
The next step is for an underwriter at the insurance company to go through your application and the findings of your medical checkup. They could request your medical records from your doctor in order to get additional information about any medical concerns you might have and any treatment you might have had. With the use of this information, they are able to evaluate the level of financial risk that you pose to the firm and calculate an appropriate premium for your coverage.
Your application and the results of the medical exam will be evaluated by the firm before a decision is made on whether or not to grant your request to acquire coverage. This procedure might take days or weeks, depending on factors such as whether or not you completed an application in its entirety, how long it takes for test results to be received, whether or not the firm wants information from your physician, and so on.
In the Event That Your Coverage Is Refused
You have many choices available to you in the event that you “fail” the medical test and the insurance company decides not to cover you or offers to cover you at a higher cost as a direct consequence of the findings of your exam. You can ask your insurance broker if there is a company that will work with your medical status, try to get a policy that does not require a medical exam, or pursues group term life insurance through your employer, which typically does not require a medical exam. In addition, you can try to get a no-exam policy.
If you are given insurance but the rate isn’t satisfactory to you, you have the option to buy it for the time being and then submit a request to have the rate reassessed at a later time (and aim to improve your health during that time). It goes without saying that you may make inquiries with more than one insurance provider in order to look for the life insurance coverage that is the greatest potential fit for your specific situation.
Strategies for Cutting Down on the Cost of Your Life Insurance Premium
Your age and the medical history of your family are two of the three primary elements that determine the amount of your insurance premium; however, there are things you can do to influence the third of these aspects, which is your lifestyle. You may be able to get a better deal on your monthly insurance cost if you:
- Quit smoking. If you don’t smoke, you have a better chance of living a longer life, which means the life insurance company will have more time to collect your premium payments before it would have to consider paying out on the policy in the event of your passing.
- Lose weight. Losing weight often results in improved cardiovascular health, including lower levels of cholesterol and blood pressure, and a reduced likelihood of acquiring long-term conditions such as diabetes. Because of all of these positive changes in your health, you can be considered a lower risk for insurance.
- Your use of alcohol should be cut down or stopped entirely. Consuming alcoholic beverages present a possible danger to one’s health. When you apply for life insurance, the company will review your driving record, your medical exam, and your application to obtain a picture of your drinking habits. If you cut down on your alcohol use or give it up totally, the insurance provider will see you as less of a risk, and as a result, they will probably reward you with a cheaper rate.
- Work on your driving skills. Insurance companies might boost your price if you have several moving infractions.
Other factors that are beyond your control that might bring your premium down include the following:
- Altering your life insurance coverage from permanent to term. Changing to a term life insurance policy can be something you want to think about, depending on your age and how long you believe you will continue to need life insurance protection. Before making a change to your coverage, you should first confirm the termination terms of your existing plan.
- Changing auto insurance providers It’s possible that you can acquire coverage that’s the same or even better for less money.
Getting rid of the riders. Riders are supplemental insurance features that may be added to your policy at your discretion and provide extra benefits to you or your beneficiaries. The following are examples of different kinds of riders: - Your beneficiaries will receive payment under the accidental death benefit rider if your passing was the result of an accident.
Rider for children’s term life insurance: payout made in the event that a kid who is covered by your life insurance policy passes away - Waiver of premium rider: if you become fully and permanently handicapped, the insurance company will pay your premium for you.
- Living benefits rider: provides a part of your death benefit payment in advance in the event that you are diagnosed with a terminal disease or if you need long-term care or services from a nursing home.
- Payor rider: in the event of your passing away or becoming handicapped before a covered dependant kid reaches a particular age, the premiums will be waived.
- Searching for policies that have “no load” or “low load.” Insurance brokers often charge a flat fee for these plans rather than a significant commission, which contributes to the policies’ generally more affordable cost.
- Inquiring about possible reductions in payment. If you pay your account in full each year as opposed to making monthly payments, you could be eligible for a reduction. A discount may also be offered by insurers if you want to have your monthly payment deducted electronically from your checking account.
- Examining the details of your credit report. When deciding how much to charge you for insurance, insurance firms may look at your credit history. The likelihood that you will pay your premium in whole and on time, as well as the likelihood that you will pay your obligations on time, are both reflected in your credit report.
- electing a provider who has a track record of successfully covering patients with your condition. A broker may assist you in finding a firm that is more likely to deal with you and may give a better cost if you have a medical issue.
- Take a look at the file you have with the Medical Information Bureau. Through the Medical Information Bureau, insurance companies exchange information on the applicants’ medical problems (MIB). You should examine your file after requesting a free copy of it from the MIB website and going through it since any erroneous information might have a negative impact on your premium.
When Should I Ask My Doctor to Fill Out a Questionnaire for My Life Insurance Policy?
After receiving your approval, many providers of life insurance will get in touch with the clinic where you get treatment in order to collect your medical records. In addition to this, a medical questionnaire will be filled out by the doctor’s office. Additionally, the doctor can be asked to sign a statement as an attending physician attesting to the truthfulness of the information provided here.
On an Application for Life Insurance, Why Is the Applicant’s Signature Required?
If you submit a life insurance application that contains any lies or information that you are aware is inaccurate, this is considered insurance fraud. By signing the policy, you are confirming that all of the information included in the application was true and correct.
When a person becomes eligible to sign an application for life insurance, what is the youngest age they must be?
This may vary from place to place, but the majority of states have set the minimum age at which an individual can sign an application for life insurance at 18. In the state of Washington, an individual must provide their signature on a life insurance application for them if they are older than 15 years old.
What are the prerequisites for taking out a life insurance policy on another person, and what are the premium costs?
If you want to buy life insurance for someone else, you need to be able to demonstrate that you have an insurable interest in that person first. Otherwise, you won’t be able to buy the policy. This requires evidence that a person or organization will suffer financial or other types of problems as a consequence of the death of another person.