Get Life Insurance: Tips For Approval

Getting approved for life insurance can be a daunting task, but it's a necessary one if you want to ensure your loved ones are provided for after your death. The process for approval can vary depending on the type of life insurance policy and the company you choose, but there are some standard steps you'll need to take. Here's a guide to help you navigate the process and increase your chances of getting approved for life insurance.

First, you'll need to decide how much coverage you need and what type of policy is right for you. There are two main types of life insurance: term and permanent. Term life insurance provides coverage for a specific period, usually between 10 and 30 years, and is generally the cheaper option. Permanent life insurance, on the other hand, provides lifetime protection as long as you continue to pay the premiums and often includes a cash value component. Within permanent insurance, there are whole life and universal life policies to choose from.

Once you've determined the type of policy you need, it's time to start researching different insurance carriers. Look for companies with strong financial ratings and positive customer reviews, and consider the policy options and riders they offer to find the best fit for your needs. You can also work with an independent agent or broker who can help you compare quotes from multiple providers.

After selecting a few potential insurers, you can request and compare quotes to get an idea of pricing. Keep in mind that the quotes are just estimates, and the final premium may change after a medical exam and further evaluation of your application.

The next step is to fill out the insurance application, which will require basic personal information as well as details about your health, lifestyle, and financial situation. Be honest and accurate when completing the application, as any misleading information could lead to your application being denied or your beneficiaries being denied the death benefit later on.

Depending on the insurer and the policy, you may also need to undergo a phone interview and a medical exam. The medical exam typically involves a review of your medical history, blood pressure measurement, and bloodwork.

Finally, you'll need to wait for the insurance company's underwriter to review your application and make a decision. This process can take several weeks, and if approved, you'll receive the policy documents to sign and approve. If you're not happy with the quoted premium, you can work with your agent to adjust the policy coverage or term length.

Be honest about your health and lifestyle

Being honest about your health and lifestyle is crucial when applying for life insurance. This is because life insurance companies want to know how likely it is that you will die while covered by their policy. They assess this risk by asking detailed questions about your health, lifestyle, and activities. Being truthful ensures that your loved ones receive the intended financial protection. Here are some reasons why honesty is the best policy when it comes to life insurance applications:

Health History:

Be transparent about your medical history, including any illnesses, surgeries, hospitalizations, and prescription medications. Having your medical records on hand can help you provide accurate information. Remember that insurers will likely verify your medical history through various sources, including your medical records and the Medical Information Bureau (MIB).

Family Medical History:

Disclose any critical conditions or diseases in your family, such as cancer or heart disease. Insurers are particularly interested in early-onset diseases, so be prepared to provide details about the age of onset and the age of death for any affected family members.

Lifestyle Habits:

Be honest about your lifestyle habits, including tobacco, alcohol, and drug use. These factors can significantly impact your risk assessment and premiums. Even occasional smoking or past drug use should be disclosed to avoid any allegations of misrepresentation.

Risky Activities and Hobbies:

Don't hide any high-risk activities or hobbies, such as skydiving, rock climbing, or racing cars. These activities increase your chances of death, and failing to disclose them may result in higher premiums or even denial of coverage.

Criminal History:

Be forthcoming about any criminal convictions, driving violations, or suspended licenses. Insurers typically focus on a specific time frame, such as the past five years, so know the dates of any relevant incidents.

Financial Information:

Provide honest and accurate information about your income, net worth, and assets. This helps the insurer ensure that you can afford the premiums and that the coverage amount aligns with your financial situation.

Remember, lying or omitting information on your life insurance application is considered insurance fraud and can lead to serious consequences, including denial of coverage, increased premiums, or even criminal charges. Being honest about your health and lifestyle is essential to securing the right coverage and ensuring your beneficiaries receive the intended benefits.

Understand the different types of life insurance

There are two main types of life insurance: term life insurance and permanent life insurance. Term life insurance covers you for a set number of years, while permanent life insurance covers you for your entire life.

Term Life Insurance

Term life insurance is typically sold in lengths of one, five, 10, 15, 20, 25, or 30 years. Coverage amounts vary depending on the policy but can go into the millions. Most people buy term life insurance for a length long enough to cover their prime working years. That way, if they die early, they can help a surviving spouse or other beneficiary meet short-term financial needs like paying off a mortgage or supporting their kids through college. Term life insurance is often the cheapest option and is sufficient for most people. However, if you outlive your policy, your beneficiaries won't receive a payout.

Permanent Life Insurance

Permanent life insurance is designed to provide coverage for your entire lifetime and includes a cash value component. Whole life insurance and universal life insurance are two types of permanent life insurance.

Whole Life Insurance

Whole life insurance typically lasts your entire life, as long as you keep up with premiums. It's the closest thing to "set it and forget it" life insurance you'll find. In general, your premiums stay the same, you get a guaranteed rate of return on the policy's cash value, and the death benefit amount doesn't change. Whole life insurance is usually more expensive than term life insurance, but it offers a guaranteed rate of return and is relatively simple compared to other permanent life insurance options.

Universal Life Insurance

Universal life insurance allows you to adjust your premiums (within limits) and has a cash value component that grows based on market interest rates. Premiums typically increase over time, forcing you to increase your premium payments or cover rising costs by subtracting from your cash value account or death benefit. Universal life insurance is less expensive than whole life insurance and can adapt to your needs as life changes. However, the death benefit and cash value growth are not guaranteed.

Variable Life Insurance

Variable life insurance is tied to investment accounts such as bonds and mutual funds. Variable life insurance premiums are typically fixed, and the death benefit is guaranteed, regardless of how the market fares. There is potential for considerable gains if your investment choices do well, but it requires you to be hands-on in managing your policy because the cash value can change daily based on the market.

Burial Insurance or Final Expense Insurance

Also known as final expense insurance, burial insurance is a small whole life insurance policy that helps your family pay for your funeral, burial, and other end-of-life expenses. The death benefit is guaranteed and typically ranges from $5,000 to $25,000. A medical exam is usually not required, making it more accessible to seniors with pre-existing health conditions. Coverage is capped at low amounts, and if you die within two or three years of taking out the policy, your insurer may not pay the full death benefit.

Other Types of Life Insurance

There are also other types of life insurance, such as group life insurance, mortgage life insurance, credit life insurance, accidental death and dismemberment insurance, and joint life insurance. When choosing a life insurance policy, consider your specific coverage needs, investment and estate planning goals, and budget.

Research life insurance companies

Researching life insurance companies is an important step in the process of getting approved for life insurance. Here are some detailed tips to help you with this:

Understand the Different Types of Life Insurance Companies

There are two main types of life insurance companies: captive agents and independent agents/brokers. Captive agents represent a single insurance company, while independent agents or brokers work with multiple companies. Independent agents can offer a wider range of policy options and may be better able to find you the best rates. However, some of the largest insurers, such as State Farm and Allstate, only offer their products through captive agents.

Review Company Ratings and Customer Reviews

When researching life insurance companies, it is important to consider their financial strength and ability to pay out claims. You can review ratings from independent agencies such as AM Best Company, Fitch Ratings, and Moody's Investor Services. Additionally, customer reviews and referrals can provide valuable insights into the quality of service and claims processing.

Compare Quotes and Coverage Options

It is essential to compare quotes and coverage options from multiple life insurance companies. This will help you find the most competitive rates and ensure that you get the coverage that best meets your needs. An independent agent or broker can assist you in this process by running quotes from different providers.

Consider the Company's Customer Service

The level of customer service a life insurance company provides is also an important factor to consider. You can get an idea of this by reviewing studies from J.D. Power, which evaluates customer satisfaction and claims processing. Choosing a company with a strong track record of positive customer experiences can make a significant difference in the event of a claim.

Evaluate the Company's Underwriting Process

Underwriting is the process by which insurance companies assess your risk and determine your premium rates. Some companies use accelerated underwriting, which leverages technology to analyse data and speed up the application process. Others may require a more traditional approach with a medical exam and in-depth health assessment. Understanding the underwriting process of each company can help you manage your expectations and choose the one that aligns best with your needs and preferences.

Research Available Riders

Riders are additional benefits or options that can be added to your policy to customise your coverage. When researching life insurance companies, consider the riders they offer and how they could enhance your protection. Examples of common riders include the children's term rider, accelerated death benefit rider, and waiver of premium rider.

Assess the Company's Reputation and Experience

When choosing a life insurance company, it is beneficial to select one with a strong reputation and extensive experience in the industry. You can review their history, including any awards or recognition they have received. Additionally, you may want to ensure that the company is licensed to sell insurance in your state, as this is a requirement for both insurance companies and agents.

By following these steps and conducting thorough research, you will be well-informed about the life insurance companies you are considering. This will enable you to make a confident decision and choose the company that best meets your coverage needs, budget, and service expectations.

Compare quotes from different providers

Comparing quotes from different providers is an important step in getting approved for life insurance. Here are some detailed tips to help you through the process:

Shop Around

Don't settle for the first quote you receive. Compare rates and coverage options from at least three to four insurers to find the best deal. This will help you get a sense of the market and avoid overpaying for your policy.

Standardise Your Comparison

Ensure you're making like-for-like comparisons by standardising the key variables. Compare policies with the same level of coverage, term length, and riders (optional provisions that provide extra benefits). This way, you can be sure you're getting an accurate sense of the cost and value of each policy.

Consider the Extras

When comparing policies, look beyond the premium cost. Some policies may include free riders, while others may not. If customising your policy is important to you, factor this into your decision.

Understand the Different Types of Life Insurance

There are two main types of life insurance: term and permanent. Term life insurance covers you for a set period, such as 10 or 20 years, and it's usually the most affordable option. Permanent life insurance, on the other hand, lasts your entire life and often includes additional features like cash value, though it tends to be more expensive.

Provide Accurate Information

When requesting quotes, be honest and accurate about your personal details. This includes information such as your age, weight, health status, lifestyle choices, and family medical history. Inaccurate information could lead to issues with your application or, worse, problems with a payout in the future.

Use Different Comparison Methods

You can compare quotes by going directly to insurers, either through their websites or agents. Alternatively, you can use a broker, who will gather quotes from multiple companies for you. Online comparison tools are also a great way to quickly generate quotes from a range of providers. However, keep in mind that brokers and comparison tools may not cover every insurer, so if you have a specific company in mind, check that they're included.

Check Financial Strength Ratings

When assessing insurers, look at their financial strength ratings from agencies like AM Best or S&P Global. This will give you an idea of their reliability and ability to pay out claims in the future, which is especially important for long-term life insurance policies.

Read Reviews

Reviews can give you valuable insights into other customers' experiences with a particular insurer. Check for complaints and overall satisfaction levels to get a sense of the company's reputation and how they handle issues.

Compare Quotes Regularly

Life insurance needs can change over time, so it's a good idea to review your policy and compare it with other options periodically. This will ensure you're always getting the best coverage for your circumstances.

Remember, the key to successful life insurance shopping is research and standardisation. Take the time to understand the different options available and compare them on a like-for-like basis to make an informed decision.

Fill out the application

Filling out the application is a crucial step in the process of getting approved for life insurance. Here are some detailed instructions on how to complete this step:

Gather Information

Before starting the application, ensure you have all the necessary information at hand. This includes basic personal information such as your name, address, phone number, email, Social Security number, and driver's license number. Additionally, be prepared to provide financial information, such as your salary and net worth. You will also need to disclose any health and medical information, including your height, weight, medical conditions, and prescriptions. If you have any lifestyle habits like smoking or drinking alcohol, be ready to provide those details as well.

Choose Your Beneficiaries

As part of the application process, you will need to select your beneficiaries, who are the individuals or entities that will receive the policy's death benefit upon your death. You can choose one or more beneficiaries, such as your spouse, children, or a charity. If you choose multiple beneficiaries, specify the percentage of the coverage amount that will go to each person. For example, you could allocate 70% to your spouse and 30% to your child. It is recommended to choose both a primary and contingent beneficiary. The primary beneficiary will receive the payout if they are alive and contactable at the time of your death. If the primary beneficiary is deceased or cannot be located, the contingent beneficiary will then receive the benefit.

Provide Detailed Health Information

The life insurance application will ask for comprehensive information about your health and medical history. Be prepared to disclose any medical conditions, surgeries, medications, and treatments you have had. The insurer may also inquire about your family's medical history, especially if there are any history of diseases or conditions that could impact your life expectancy. Have the contact information of your primary physician and any other relevant doctors readily available.

Disclose Lifestyle and High-Risk Activities

In addition to health information, the application will inquire about your lifestyle and any high-risk activities you engage in. Be prepared to answer questions about your current medications, drug and alcohol use, criminal history, driving record, and risky hobbies or professions. These factors can impact your insurance rates and eligibility, so it is essential to be honest and transparent in your disclosures.

Submit the Application

Once you have completed the application and gathered all the necessary information and documents, submit it to the insurance company or agent. You may be able to submit the application online, or you may need to submit a physical form. After submitting the application, the insurance company may require additional steps, such as a phone interview or a medical exam, before making a final decision on your eligibility and premium rates.

Frequently asked questions