The Life Insurance Buying
Process
Purchasing life insurance can be a long, paper-intensive and may
seem intrusive. However, it is one of the most important decisions
you will make in caring for your dependants. A paramedical
examination is typically required for policies of more than
$100,000. This is an exam in which you give at minimum both blood
and urine samples. In addition, the paramedical examiner will ask
certain questions that will often be verified by the insurance
company.
You will also need to meet with the insurance company for detailed
interviews in regards to your lifestyle, intended foreign travel
destinations, your family health history and your personal health
history. Sometimes you will need to have multiple interviews in
order to verify your information. Most policies require you to meet
certain guidelines, regardless of the type of life insurance you
buy.
Be sure to answer questions honestly and do not withhold
information. Not only is it a crime but your claim can be voided and
no funds paid out. The Medical Information Bureau (MIB) maintains a
database of insurance applications and these are often cross
reference when an insurance company is deciding on taking a policy.
The job of this bureau is to reduce fraud.
If you choose not to go through the underwriting process, you have
two other options – simplified issue life insurance and guaranteed
issue life insurance. However, these are more expensive.
Simplified issue life insurance
Simplified issue life insurance can be purchased without the need
for a medical exam. You will only need to answer a few medical
questions. However, if you report health problems, you will most
likely be declined. If you are healthy, even if you have negative
medical history, an underwritten policy is going to be your least
expensive route.
Guaranteed issue life insurance
Guaranteed issue life insurance is sold to any applicant below the
age limit. It is the most expensive way to purchase life insurance
and should only be considered if you've been turned down for every
other plan but still need a life insurance policy. Guaranteed issue
life insurance policies have graded death benefits, which means your
beneficiaries won't receive a full death benefit until several years
into the policy.
When it comes to naming your beneficiary, the life insurance company
will want to see only the names of those financially dependent upon
you and will typically not accept just any acquaintance, friend or
relative.
How life insurance is priced
Your life insurance policy will be based on your life expectancy,
the amount you request and the length of the policy. Term life is
for only a set amount of time and is typically cheaper and easy to
understand. Permanent or whole life insurance is for your entire
life and is more complicated and more expensive.
Your life expectancy is based on your current health condition, your
possible health condition due to your medical history and your
lifestyle choices. Even common conditions, such as high blood
pressure, heart disease, obesity, cancer and depression, can raise
your premiums or even make you ineligible. Depending on your medical
history, you'll be grouped into different categories such as
"preferred plus," "preferred," "standard" and "substandard." This
category ultimately determines the amount of your premiums.
When a person with severe health conditions or a combination of
conditions finds it hard to find a life insurance company that will
grant them a policy, they can turn to impaired-risk specialist.
Impaired-risk specialists focus on inuring people with certain
medical conditions. They may not be found at your local insurance
agency, so a wider search area may be necessary.
Working with a life insurance agent
Finding the right life insurance policy can be time consuming and
daunting, however, it is a very important decision. Make sure you
meet with your life insurance agent to pick the right plan for you
and your loved ones. If you are uncomfortable with the policy or the
provider, don't be afraid to walk away and find a new agent.
Purchasing life insurance is an important decision in providing for
your dependants when you are gone, so be sure to invest the time and
effort into choosing the right plan. |
Insurance
Articles
|
