Trish Buchanan – Broker at Berkshire Hathaway HomeServices
Life insurance can help ensure your dependents have the resources they need to replace your income after you die. But how do you go about purchasing coverage? And what can you do to get the best possible rate? Understanding the process for obtaining life insurance can help you get the coverage you need at a price you can afford.
There are two main categories of life insurance: permanent life insurance, which provides coverage for your entire life, and term life insurance, which provides coverage for a set period of time. You can learn more about life insurance options by contacting a local insurance broker.
One you have decided to purchase life insurance, you’ll need to determine your coverage amount by considering how much your beneficiaries will need after you die. This amount will depend on several factors, including the age of your dependents, your spouse’s financial ability and your combined financial resources.
You will need to apply for life insurance. The application will ask for basic information such as your name, address and employer. It will also ask for the following personal information:
While it may be tempting to lie about your weight or other health issues, it’s important to tell the truth. If the company discovers you lied about a health condition or lifestyle, it can increase your premium, cancel your policy and/or deny a beneficiary’s claim to the death benefit.
Some insurance companies will accept your answers to health-related questions on the application. However, most companies require an in-person medical exam. A life insurance agent will arrange for a paramedical (a licensed healthcare professional contracted by the insurance company) to meet you at your home, office, or a clinic selected by the insurance company.
There may be additional tests you need to undergo depending on your age, the type of policy you want and the amount of coverage you’re applying for. Additional tests could include an EKG, a chest X-ray, and/or a treadmill test.
Next, an underwriter at the insurance company will review your application and medical exam results. He or she may order medical records from your physician to learn more about any medical conditions you may have and any treatment received. This information helps them determine what risk you represent to the company financially and how much to charge you for coverage. If you lie about a medical condition, the insurance company may not only deny you coverage but may also “red-flag” you, meaning other insurers will know you were denied coverage because you lied.
Once your application and medical exam have been reviewed, the company will either approve or deny your request to purchase coverage. That process can take days or weeks, depending on if you have submitted a complete application, how long it takes to receive lab results, if the company requests information from your physician, and so on.
While you can’t do anything about two of the three main factors affecting your insurance premium (age and family medical history), there are steps you can take regarding the third: lifestyle. You could lower your insurance premium if you:
It pays to take the time to educate yourself about your life insurance options. Knowing what’s available and the type of coverage you need can benefit both you and your loved ones and make the application process go more smoothly.