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Learn more about life insurance with these useful materials
 


Life Resources


Learn more about life insurance with these useful materials
 

April 12, 2017 // All Resources // How to Buy

The Truth Be Told

Applying for life insurance may seem daunting, but it’s actually fairly straightforward. Understanding how the process works will help make it go more smoothly.

Life insurance is essentially about transferring risk. Many people want to make sure those they care about would be taken care of financially if they died prematurely. It can be difficult to save the necessary funds to build this safety net on your own, so by purchasing life insurance, you transfer that financial risk to the insurance company.

In return, the insurance company collects certain information about you to assess that risk. Life insurance premiums are based on a range of factors, but the two biggies that you probably know about are your age and your health. The younger and healthier you are, the lower your premiums will be.

In addition, companies may look at lifestyle factors. For example, they’ll want to know if you have any dangerous hobbies, such as skydiving; if you’re a smoker; or if you have a driving record which includes things like DUIs.

Underwriting

When you buy an individual life insurance policy, it usually goes through an underwriting process. This means you give the insurance company general information about your health and lifestyle that they can evaluate to determine your premium rate.

Some options ask you to take a paramedical exam. This is not a full medical exam; instead it usually consists of some health and lifestyle questions along with information about your physicians and medications, height and weight measurements, blood pressure readings as well as taking blood and urine samples. 

It pays to be truthful throughout the application process, as the information gathered during the underwriting process through the paramedical examination, public databases and medical records from your physician can notify the company of any errors or misrepresentation you may have made. In addition, services like the MIB, Inc. can alert the company, as they keep a database of information gathered from other insurance companies, on your medical background.

What It’s All For

The ability for the insurance company to know your current state of health and lifestyle allows them to give you the most competitive rate on your insurance.

If your health is not all that it could be—let’s say you’re in the process of losing weight or controlling your sugar if you’re a diabetic, you should still move forward on getting life insurance. If you have positive changes in your health—like losing those 30 lbs.—you can often re-qualify for a lower premium.

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