Purchasing Life Insurance While On Medication: What You Need To Know

Life insurance is a legally binding contract that promises a death benefit to the policy owner when the insured person dies. The policyholder must pay a single premium upfront or regular premiums over time for the life insurance policy to remain in force. When the insured person dies, the policy's named beneficiaries will receive the policy's death benefit.

There are two primary types of life insurance: term life and permanent life. Term life insurance is generally the cheapest kind of life insurance. It provides coverage over a specific term period, usually between 10 and 30 years. Permanent life insurance is typically more expensive as it offers more benefits. It provides coverage for the duration of the insured's lifetime.

When purchasing life insurance, it's important to consider your unique circumstances, including your health and any medications you are taking. Medications can impact your life insurance application and result in higher premiums or even denial of coverage. It's crucial to be upfront and honest about your medication use during the application process.

To buy life insurance, you can choose between purchasing directly from a life insurance company, through a life insurance agent, or through a life insurance broker. The process typically involves deciding on the coverage amount, picking a policy type, researching different carriers, requesting and comparing quotes, filling out the application, preparing for a phone interview, scheduling a medical exam, and waiting for approval.

Understand the two main types of life insurance: term and permanent

Life insurance is an essential part of financial and legacy planning. When shopping for coverage, you will come across two main types: term life and permanent life (also known as whole life). Understanding the differences between these two main types of insurance can help you make coverage decisions according to your needs and goals.

Term Life Insurance

Term life insurance is purchased to last for a specified period, such as 1, 5, 10, or sometimes as much as 30 years. Coverage expires when that period ends, and therefore, a payout will only happen if the insured's death occurs during the specified period. Term life insurance is usually the least costly option, as it offers a death benefit for a restricted time and doesn't have a cash value component.

A term life policy may be the most simple and straightforward option for many people. A death benefit can replace the income you would have earned during a set period, such as until a minor dependent grows up, or it can pay off a large debt like a mortgage.

Term life policies do not build cash value, and your premiums go directly towards your payout, making costs comparatively lower than permanent life insurance. However, some insurers have created term life products with a "return of premium" feature, which returns a portion of the premiums if a claim is not filed before the end of the coverage term. These policies tend to be more expensive upfront than standard term life insurance.

There are different types of term life insurance, including level term and decreasing term. Level term life insurance offers a death benefit that stays the same throughout the policy, while decreasing term life insurance reduces potential death benefits over the policy's term, usually in one-year increments.

Permanent Life Insurance

Permanent life insurance, often called whole life insurance or cash value life insurance, provides coverage for the insured person's lifetime as long as premium payments are maintained. Unlike term life, these policies may build cash value, which the policyholder or their heirs can access under certain conditions. Premiums are generally higher as a result. Whole life products include several subcategories, including traditional life, universal life, variable life, and variable-universal life.

When you pay premiums for permanent life insurance, they go towards the cost of insuring you, your policy fees, and building cash value. In the case of traditional whole life, both the death benefit and the premium are typically designed to stay the same throughout the policy period. However, the costs to insure you can climb as you age, especially if you live past 80.

The cash value of permanent life insurance serves as a savings account that the policyholder can use during their lifetime, and this cash accumulates on a tax-deferred basis. Some policies have restrictions on withdrawals, but the cash value can generally be used to take out loans or pay policy premiums.

All permanent or whole life policies typically offer the advantage of coverage during your entire life but can charge higher premiums than term life products. Therefore, your death benefit may be smaller for the same amount of money. People choosing whole life insurance are likely to prioritize certain features that fit their individual financial goals, such as the ability to plan for consistent benefits and premiums and the potential for tax-deferred savings growth through the cash value component of their policy.

Research different life insurance providers

When researching different life insurance providers, it's important to keep in mind that no two companies are the same. The best life insurance company for you may offer a combination of coverage options that fit your insurance needs and positive customer service experience. Here are some steps to help you with your research:

• Review the company's website: Visit the websites of different life insurance companies and look at the policy options they offer. Check if they have a combination of coverage options that align with your needs.
• Check customer service reviews: Look at the company's customer service reviews to get an idea of their level of customer service. You can refer to J.D. Power studies for life insurance to understand their customer service better.
• Review the company's financial strength: It is crucial to choose a financially stable company that will be able to pay out your claims in the future. You can review ratings from agencies like AM Best, S&P, and Moody's to assess their financial strength.
• Research and compare riders: Riders are add-on coverage options that can enhance your policy. Different life insurance companies offer different riders, so it's important to research and compare the available riders to see if they meet your specific needs.
• Work with an independent agent or broker: Consider working with an independent agent or broker who can help you run quotes from multiple providers and save you time.

Request and compare quotes from providers

Requesting and comparing quotes from providers is an essential step in the process of purchasing life insurance. Here are some detailed instructions to help you navigate this step effectively:

• Assess your needs: Start by evaluating your personal circumstances and financial goals to determine whether you need term or permanent life insurance. Term life insurance is ideal if you only require coverage for a specific period, such as until your children finish college. On the other hand, permanent life insurance offers lifelong coverage and includes a cash value component. Consider factors like your financial obligations, income replacement, and future expenses to determine the amount of coverage you need.
• Research multiple providers: Explore life insurance companies that offer the type of policy you need. Compare providers based on customer satisfaction ratings and financial strength ratings from independent agencies like J.D. Power and AM Best. This will give you insight into how companies typically interact with their clients and their ability to pay out claims.
• Compare life insurance options: Gather quotes from multiple insurers and carefully compare the type of policy, coverage amount, death benefit, and other features each insurer offers. Shopping around can help you find the best deal as insurers evaluate risk factors differently, leading to varied premiums.
• Consider working with a broker: Working with a licensed insurance broker can simplify the process. Brokers can shop around on your behalf and provide expert guidance tailored to your specific needs. They have access to a wide range of insurance products and can help you navigate the complex world of life insurance.
• Apply for a policy: Once you've selected an insurer and decided on the type of insurance, it's time to apply. You can apply through a licensed agent or online, depending on the insurer and your preferences. Keep in mind that the application process may include a medical examination, especially for certain types of policies. After purchasing your policy, you'll usually have a "free look" period to review and ensure it meets your expectations.

Disclose your medication use and medical history

When applying for life insurance, it is important to be honest and upfront about your medication use and medical history. This includes disclosing all medications you take, even those that may impact your application. Being transparent helps insurers accurately assess your risk and prevents future complications.

During the underwriting process, insurance companies will typically inquire about your current medication use, including details on dosage, frequency, and duration. They will also review your medical records and may request additional information from your doctor. This allows them to evaluate your overall health and determine your eligibility and premium rates.

It is important to note that certain medications may result in higher premiums or even a denial of coverage. This is because the side effects of some medications can pose a higher risk for the insurance company, making them less likely to offer standard premium rates. However, it is still possible to qualify for coverage, albeit at a higher premium, or explore different options with the help of an insurance agent.

To mitigate the impact of medication use on your life insurance application, you can take several steps:

• Be upfront and disclose all medications during the application process.
• Obtain a doctor's note explaining the reasons for your medication use and how they are being managed.
• Improve your overall health by adopting healthier lifestyle habits.
• Shop around and compare quotes from multiple insurers, as underwriting criteria may vary.
• Work with an experienced insurance agent who can guide you through the process and help you find a suitable policy.

Prepare for a medical exam

Preparing for a medical exam for life insurance is important as the results can affect your rate classification, which helps determine your premiums. While you can't overhaul your lifestyle in the few days before your exam, there are some simple things you can do to ensure your body is in its best possible form. Here are some tips to prepare for your life insurance medical exam:

24 hours before the exam:

• Limit salt and high-cholesterol foods such as red meat.
• Avoid over-the-counter medications such as antihistamines and nasal decongestants, as these can increase blood pressure.
• Get a good night's sleep. Aim for at least six hours of sleep to avoid increased blood pressure.

12 hours before the exam:

Refrain from alcoholic beverages and strenuous exercise, which can raise blood pressure levels.

One hour before the exam:

• Avoid caffeine and nicotine.
• Drink a glass of water. Being hydrated will help with the blood test.

At the exam:

• Have a photo ID and application paperwork ready.
• Wear short sleeves or sleeves that can be easily rolled up so that the examiner can draw blood and take your blood pressure.
• Ask the examiner if you need to fast before the exam.
• If you have a full bladder during the blood pressure reading, it can raise the reading by 10 to 15 points.
• Keep your feet flat on the floor during the blood pressure reading. Dangling your legs can increase the reading by 6 to 10 points.

Frequently asked questions