You may have never really thought about what it takes to qualify for a life insurance policy or what affects the premiums you pay. By the time you find out, it might be too late. These are the most important factors that go into determining what you will pay for your life insurance coverage, as well as whether or not you will qualify.
Your age
The older you are, the more you will pay for life insurance. When you purchase a policy at a younger age, the company expects you to pay premiums over a much longer period of time, and therefore your monthly payments will be lower. The higher it is, the shorter the period of time over which they can expect to receive payments from you. This means that premiums will increase accordingly. Your age also has an impact on your health. The older you are, the more likely you are to develop a serious health condition that could make it even more likely that the company will pay for the policy.
Your Health
Everything related to your health will be taken into account when you apply for a policy. Most companies will require at least a completed questionnaire, if not a visit from a doctor or nurse to check on your general health. This includes things like your weight-for-height ratio to determine if you’re overweight, blood tests to check cholesterol and look for serious illnesses, and sometimes more. You will be asked about your lifestyle, as well as your use of tobacco, drugs, and alcohol. Even what appears to be a minor health problem can result in a higher premium, as it could turn into something more serious later on.
tuxedo
If you are a smoker, it will cost you more money when taking out life insurance. In fact, you have to be smoke-free for a year to get a non-smoking rate on a policy. But, do not despair, if you are a smoker who is in the process of quitting, go ahead and take out your policy now. Then, right after your first anniversary, request that the insurance company retest you for nicotine. Remember, smoking includes cigars, cigarettes, pipes, and marijuana. By the way, casual marijuana use is not necessarily an automatic decline.
Illness
If you have a disease, insurance companies want to know your actual diagnosis, what medications you’re taking, how much you’re taking, and how many times a day. They will also want to know the name of the doctor, the address of the doctor’s office, and when you were diagnosed. Depending on the disease, the insurance company may request health information from your doctor. Now that the new HIPAA laws are in place, that will extend the time to secure it. If you’re short on time to get insurance, start the process as quickly as possible. If you’ve had a major illness like diabetes, cancer, or any type of heart disease, remember to tell us in advance. Your disclosure will save you a lot of heartache and frustration. If you have a major illness, like cancer, heart disease, or diabetes, it might be more difficult to find coverage, so be patient during the process.
athletic
For those of you like me who take care of yourselves, there are companies that offer an athletic qualification. This is for people who are “amateur” athletes. If you exercise all the time, whether through some organized sports or some intense training, and your body is in excellent shape, then this could be an option for you. Remember, however, that in order for you to qualify, the insurance company will be rigorous in its evaluation. Make sure you have your patience hat on. But, if you qualify, this could save you some money.
Your occupation and hobbies
If you are in a dangerous occupation, such as a firefighter, or participate in potentially dangerous activities, such as certain sports, this can affect your eligibility for life insurance, as well as your premiums. When you put your life in danger, whether at work or play, the insurance company sees a higher risk of paying the policy. In some cases, they may turn you down entirely simply based on the activities you do regularly.
Some hobbies can mean the difference between getting and not getting coverage. Some examples are skydiving, scuba diving, and rock climbing. Several years ago I had a client who was turned down because he planned to dive in the next 90 days. He spent his vacations every year near the water. Some of those years he would spend diving, others not. Since that year was a year that he planned to enjoy his on-and-off hobby, he did the right thing and revealed himself. As a licensed professional, having to hand over that decision wasn’t pretty, but if he hadn’t disclosed that and somehow accidentally died while he was diving… Well… the insurance company would have the right to refuse coverage.
Here are some of the main factors that drive insurance companies’ decisions regarding life insurance premiums and whether or not you qualify. Some of them cannot be changed, while others can, and you should be aware of them if you want to get the best rate on your policy. Lastly, let me tell you that there is never a time when you shouldn’t tell the truth. If the insurance finds out that you did not tell the truth and that you are dead, they have the right to decline your coverage.
death benefit
Another factor you may not have considered is the death benefit. Some companies offer insurance at a cheaper price if you have more insurance. For example, let’s say there are two people, the same age, the same sex, with no health problems… Everything about them is the same, but one person wants a term of $150,000 and the other wants $200,000. Some companies will offer a discount rate at the $200,000 death benefit level, as well as at other points up to the $1 million level. Make sure you know where those discounts are if they are available through that company. It could save you some money.
Serious crimes
Recently, there have been a good number of clients that have come across my desk that have serious crimes. The reason for the crimes is not important. However, this is what you need to know. In general, insurance companies have a rule of denying insurance between 2 and 5 years from the date of the felony charge. Each company has its specific guidelines for this topic.
All of the above issues can affect whether or not you get insurance. Maintaining good health is the most important factor in obtaining insurance. Make sure you don’t smoke. If so, get the insurance you need, quit smoking, and get tested again a year after you haven’t smoked for a year. Whether you’re totally healthy or not, it’s not a good idea to wait to shop after you’re completely healthy.