Life Insurance Application Process And Best Practices
Life Insurance Application Process and Best Practices
Hi, my name is Tan and I am an independent CERTIFIED FINANCIAL PLANNER™ practitioner. I want to walk you through the general process of buying a life insurance policy, what the steps are, and what to expect. This is regardless if it’s a term policy or a permanent policy.
Decide on the type of insurance policy and coverage amount.
Fill out the application.
Do a phone interview.
Complete a convenient medical exam with a trained professional at a time and location that is convenient for you. There is no cost for the exam, and no obligation to purchase a policy.
The underwriter might get your records, such as medical and driving record.
Once the underwriter received all the information for them to make an inform decision, you will be accepted or rejected for an insurance policy.
If you accept the insurance policy, sign the final documents and start paying on the policy so you can be covered. If you don't like the offer, just walk away.
Lastly, here are some tips from my experience:
There are policies called Guaranteed Issue Life Insurance Policy, which means you do not have to go through underwriting. The downsides are they offer low death benefit options and the premiums are higher than normal. If you got a rated policy or declined application, a Guaranteed Issue Life Insurance Policy might be something worth looking into.
I tell my clients to get policies that have long convertibility features and Accelerated Death Benefits features. They might not need it, but it's good to have. The benefits are already built into the premiums.
You can always change the policy type and amount of coverage before you sign the final documents. You might have to go through additional underwriting if you change the death benefit or policy type before signing the final documents.
For the medical exam, I like having my clients do it early in the morning. I tell them no eating, drinking, or exercising before the exam. Water is okay.
With the coverage amount, I like to go a little higher than needed because I have never heard from a client saying they bought too much insurance. In fact, I sometimes hear clients telling me that they wish they had bought more insurance coverage when they were younger and healthier.
Make sure the premiums fit within your budget. If you cancel the policy because you cannot afford it then apply again in the future, the price of the new policy will be higher because you are older.
If you have a need for life insurance, some insurance is better than no insurance.
Different insurance companies have different underwriting. If you applied for a life insurance policy and received an unfavorable rating health class, you might be able to get a better rating health class from another insurance company.
You will see different pricing when comparing life insurance because some companies are more competitive than others.
The insurance company pays us directly when we sell a life insurance policy. The commissions are part of the premiums, so you don't pay more to use our services. The premiums are the same if you go directly to the insurance company or to us.
The key takeaway is, you should review several quotes from different companies to make sure you are getting the best deal.
Until next time. This is Tan, your trusted advisor and thank you for listening.
This material is for educational use only and does not constitute tax, legal, or investment advice. Information may be changed or updated without notice. Consult with a licensed professional regarding your personal circumstances.
Please do not excerpt or copy this information without prior consent from TAN Wealth Management.