What to Expect When Applying For Life Insurance: Everything You Need To Know About The Process
Applying for life insurance coverage is a fairly simple process, but a bit of research can mean the difference between a so-so policy and a policy that’s a perfect fit for you. In this article, we'll let you know what you can expect when applying for life insurance, from the types of life insurance policies you can choose to the medical exam procedures you'll likely have to undergo.
How To Apply For Life Insurance
Whether you're working with a professional insurance broker or shopping for life insurance companies on your own, the process will be more or less the same. Here's what you'll need to do when you apply for life insurance:
1. Choose A Life Insurance Policy
This is something you should do even before shopping for insurance companies and beginning the application process. There are several different types of life insurance, each with its own advantages and disadvantages – choosing the right type of life insurance policy ensures that you get the coverage you need and can afford.
Term life insurance is the most affordable type of insurance. Because of this, it's also one of the most popular. With term life insurance, you are offered coverage for a set period of time called a term. Terms can last anywhere between five and 30 years.
Unlike term life insurance, whole life insurance offers permanent or lifelong coverage. However, this longevity comes at a price – whole life insurance can be 10 to 15 times more expensive than term life insurance. Whole life also comes with a cash value, an investment component that allows policyholders to save money in an account that accrues interest over time.
Universal life insurance is very similar to whole life in that it is a permanent life insurance policy that also comes with an investment component. However, unlike most whole life insurance policies, universal life insurance offers adjustable premiums and death benefits. This is great for individuals whose finances are not fixed and may need a more flexible plan.
Voluntary insurance, on the other hand, is a type of life insurance policy that is offered by an employer. Voluntary insurance can be offered in the form of whole life insurance or term life insurance. Usually, this type of life insurance policy is a guaranteed issue, meaning no medical exam is required. However, the coverage amount is typically lower than individual insurance.
2. Request For A Quote
Depending on the life insurance company you talk to, you may be able to input your data into an online insurance calculator or request a free quote. You'll have to provide the life insurance company with some basic information, such as your age, height, weight, date of birth, lifestyle habits, and existing medical conditions.
Companies request for your age because this is one of two major factors that can affect your premium rate. The older you get, the more expensive your premium will be.
Your health is another major factor. Insurance companies always want to minimize risks, so they are more likely to charge a higher premium to those who are more vulnerable to getting sick. If you have a health condition or a family history of chronic illness, you can expect to pay a higher insurance premium.
At this point, you'll also have to think about how often you want your insurance premium payments to be paid. You can usually choose from either a single one-time payment, annually, semi-annually, quarterly, or monthly.
Do keep in mind that online quotes and insurance calculator results won't give you the most accurate results. Insurance companies need to take a much more comprehensive look at their clients before determining the final amount.
3. Determine Your Beneficiaries
Beneficiaries, also called dependents, are the people who will receive your insurance policy's death benefit when you pass away. Usually, you can pick a primary beneficiary and a secondary beneficiary. The secondary beneficiary receives the death benefit if the primary beneficiary passes away before you do or somehow becomes ineligible for claiming.
You may also be able to assign percentages of the death benefit to different beneficiaries. For example, you may choose to assign 60 percent of your coverage to your spouse, 20 percent to your sister, and 20 percent to your child.
4. Calculate How Much Coverage You Need
Getting the best life insurance policy isn't about finding the best deal with all of the bells and whistles. It's about finding a plan that provides enough coverage for what you need at an affordable rate.
This is actually something you should do before you start your life insurance application. While it may seem daunting, calculating the amount of coverage you need is fairly straightforward. Just follow this formula:
[Financial obligations] minus [existing assets] = the insurance you need
Your financial obligations include your monthly living expenses, mortgage, auto loans, and other debts. Childcare, tuition, final expenses should also be factored in. Your existing assets are any property you own, your investment funds, retirement accounts, and existing life insurance coverage.
5. Be Prepared To Provide Some Personal Information
When you apply for a life insurance policy, you may be required to answer any of the following personal questions. Be prepared to answer these questions more than once:
What is your name, address, and phone number?
What is your age and date of birth?
What are your sex and gender?
What are your weight and height?
What are your smoking/drinking habits like?
How often do you exercise?
Do you participate in recreational drug use?
What is your occupation? Is your work considered high-risk?
Do you have any high-risk hobbies, such as scuba diving, rock climbing, or mountain biking?
Do you have any traffic violations or DUIs?
Remember that when it comes to life insurance, risk factors play a huge part in its overall cost. Your life insurance premium can shoot up if you have a "riskier" lifestyle and medical history.
But do keep in mind that it would be unwise to lie to your life insurance agent or to omit any important details. Insurance providers cross-check your information with the Medical Information Bureau, which will reveal your medical history, including your history of surgeries and pre-existing conditions. Lying on your application can lead to disqualification, so be honest and professional.
The Life Insurance Medical Exam
When you apply for a life insurance policy, you may also be required to take a medical exam, which will provide the insurance company with a better picture of your overall health.
Medical exams are usually required for whole life insurance, term life insurance, universal life insurance, and other types of permanent life insurance. Guaranteed issue policies such as voluntary life insurance and final expense insurance do not require a medical exam. Usually, these types of plans only require a health questionnaire.
Typically, you can take a life insurance medical exam at a clinic accredited by your insurance company.
What Happens During An Exam
First, you'll be asked a more comprehensive set of questions related to your medical history. You'll be asked some information about your family history, including cases of diabetes, cancer, stroke, and heart disease; any pre-existing medical conditions you have, such as chronic illnesses, disabilities, or impairments; and your history of hospital confinements and surgeries. You'll also be asked about any medication you're currently on.
As for the procedures and tests you'll have to take, you'll typically be subjected to a vital signs check, where your blood pressure and heartbeat will be examined. You might also have to give a urine sample and blood sample to rule out any liver and kidney complications. If you have a history of heart disease, you may also be asked to take an electrocardiogram (EKG), a chest X-ray, and a stress test.
Once you've completed your medical exam, an underwriter will review your application alongside your medical records and results. Upon review, the underwriter will advise the insurance company about the kinds of risks that come with insuring someone with your profile, and the amount of coverage that would fit someone like you.
Once you apply for life insurance, all you have left to do is relax and wait for your results. You can expect to hear back from the insurance company after several days.
Guaranteed issue life insurance will naturally take less time since the company has all the information it needs at hand. Permanent life insurance, whole life insurance, universal life, and term life applications may take a few weeks to process, especially if the company requests additional information from your doctor or follow-up tests on lab results.
An informed decision is a practical decision. When you know what to expect in the application process, you can make smarter decisions based on your current situation, your ability to pay life insurance premiums, your personal needs, and your family's needs.
If you want to learn more about life insurance or other ways to secure your future financially, Wesley Insurance, LLC can help. Contact us to learn more.