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When you apply for life insurance, the insurer gathers a significant amount of information about you to make an approval decision and calculate your premiums. The exact process depends on the policy type you’re applying for. However, many insurers ask the same general sets of questions with slight variations within.
This article will cover everything you’ll need during the process of getting life insurance so you can prepare accordingly. That way, you can get coverage as quickly and easily as possible.
1. Basic personal information
First, you’ll need to provide basic information about yourself. This includes personal details like your name, address, and similar items. The insurer will also ask you lifestyle-related questions like your job, and hobbies. Some jobs, like construction workers and airline pilots, are considered riskier and may cause the insurer to charge you higher premiums. Similarly, having hobbies like skydiving may cause you to pay more for a policy.
2. Medical history
Next, the insurer gathers information about your and your family’s medical history. They will ask about the history of numerous diseases and conditions you or your family members have had. They will also ask for information about your medications, illicit drug use, and alcohol consumption. For prescription medications, be as detailed as possible and provide the full name, dosage, and frequency for each.
3. Your beneficiaries
Your beneficiaries are the people who receive your death benefit payout if you pass away during the policy term. You can add one beneficiary and designate them to receive the entire death benefit, or you can add multiple and split it accordingly. For example, you can designate your spouse to receive 80% and a charity to receive 20% of the payout.
Make sure you have each beneficiary’s full legal name, Social Security number, and date of birth. For charities, provide the organization’s full legal name and the best contact information. Contact the charity as well and let them know they’re a beneficiary.
4. Financial situation
The insurer may ask about your income, assets, debts, and net worth. These help the insurer verify that you have the ability to pay your policy premiums. They’ll also ask how often you prefer to be billed. Many insurers will let you choose to pay annually, semi-annually, quarterly, or monthly. Some insurers may charge additional service fees for more frequent billing options.
5. Scheduling your medical exam
Lastly, you’ll need to schedule a medical exam. Insurers may let you perform the exam at your home, or you may need to travel to an examiner’s facility. During this exam, you’ll answer more questions. The examiner will also take down basic information and vitals and may take blood and other samples.
Keep in mind that you can get life insurance with no medical exam if you need coverage faster or if you find the medical exam inconvenient or invasive. Here are some no-exam life insurance policy options:
Final expense insurance
Final expense insurance is a policy that helps your loved ones pay for end-of-life costs, such as funeral expenses and medical bills. As small, no-exam, whole-life policies, these have low premiums, small death benefits, and cash value. Final expense insurance can be a great option if your family has enough financial assets to live comfortably in your absence but needs assistance with your end-of-life expenses.
Simplified issue life insurance
Simplified issue life insurance is a small whole-life policy that comes with a higher approval rate and a quick application. The application asks some basic medical questions but has no medical exam. Simplified issue life insurance offers inexpensive premiums, a small death benefit, and
a cash value you can use to build wealth. This type of policy can work well if you need cheaper coverage fast.
Guaranteed issue life insurance
Guaranteed issue life insurance has the smallest death benefit, usually maxing out around $25,000. However, premiums are often very affordable, approval is guaranteed, and you can build cash value. That said, guaranteed issue life insurance may have a one to two-year lockout period. If you pass away during this period, your beneficiaries only get back the premiums you paid.
The bottom line
Life insurers ask for a lot of information to determine your premiums. First, they’ll ask for basic personal and lifestyle information, medical history, and use of prescription drugs and alcohol or illicit drugs. Then, they’ll ask you for financial information and billing preferences before designating your beneficiaries.
Finally, you’ll schedule and take the medical exam. Alternatively, you could skip the exam by getting a policy such as final expense, simplified issue, or guaranteed issue life insurance. Preparing for these steps makes the life insurance process a lot easier and gives you more time to shop around for the best rates.