Term Life Insurance – What You Should Know Before You Apply!
If you are planning on applying for Term life insurance with the lowest rates, take a few minutes and read this article. We are going to go over the keys steps you need to take to receive the lowest rates on Term life insurance. A large percentage of people today walk into a quoting process followed by an application totally in the dark. This can only lead to confusion and the inability to be able to secure the lowest life insurance rates. Understanding the application process is very important.
There is a professional step by step process that you need to know before you ever make the move to apply. What you do in the very beginning will set the pace for the end result a few weeks later in the application process.
What is the main purpose that is promoting you to apply for life insurance?
Why you are planning of purchasing life insurance is the very first step you have to discuss with your agent or broker. The primary reasons could be to cover a new mortgage, to insure you’re your kid’s college education or to protect your family’s financial future if something happens to you and your income suddenly stops. Having this information will be able to determine what happens in the following steps. This is going to be the foundation of your life insurance portfolio.
What type of life insurance is going to be the best fit for your specific needs and budget.
You are going to have two basic choices which will be low cost Term life insurance or a permanent plan design which will be Universal Life. Knowing the expected period of time you will be needing the life insurance will dictate the need for either Term or Universal Life or very possibly a combination of the two. Here are three simple examples of what I am referring to.
Joe Ryan is 26 years old, just got married, just purchased a home with a 30-year mortgage and is planning on having 2 or 3 kids down the road along with the other good stuff such as car payments for him and his wife. Does Joe need life insurance? You better believe he does and will need it for quite a few years. Due to the fact Joe is only 26 years old and he has a 30-year mortgage, a good portfolio will be a 30-year Term life insurance policy which is the maximum term period with a permanent Universal Life policy also.
The highest face amount will be with the affordable Term life insurance policy to cover the most volatile years of Joe’s life. After 30 years, the term policy will terminate when Joe is only 56 years old. Will he still need life insurance at this point in his life? I would have to say yes he will.
Like most people he will still need life insurance to cover day to day financial liabilities such as credit cards debts, car payments, burial expenses and a number of other miscellaneous expense the average American has today. This is where the Universal life policy comes into play. If Joe had purchased a small Universal Life policy for approximately a $100,000 face amount along with the Term policy, Joes survivors would receive enough cash to pay off all of Joe’s debts without having to take any money out of their own savings.
Dan Smith is 25 years old, is single and has no intentions of ever getting married, having kids or ever purchasing his own home which will eliminate the need for a mortgage. In this particular case, Dan should be in good shape with a simple Universal life insurance policy for about a $100,000 face amount which will last Dan for the rest of his life and cover whatever Dan has for financial liabilities. This will prevent any of his close family members from ever having the burden of paying for Dan’s funeral expense and any outstanding debt he has accrued through the years.
Kathy Rogers is 40 years old, is single and is planning on staying single and has just purchased a new Town House and has a 20-year mortgage for $250,000. She lives a modest lifestyle and does not plan on going into any major forms of debt. An option for Kathy would be a possible low cost Term life insurance plan for $250,000 with a 20-year Term policy which would cover her mortgage and then as the years go by and the total payoff on the mortgage goes down and down she can convert her policy into a Universal life policy to cover any debt for the rest of her life. She can also convert the 20-year Term policy to a permanent Universal Life policy with a lower face amount since she will not need the full $250,000 face amount.
Now that we know what the purpose is for the life insurance and what type to apply for, we move along to the next step which is getting ready to apply.
It is a common practice for people to chat with their agent and intentionally not expose any negative information such as health conditions like being overweight, having high blood pressure, high cholesterol and many other conditions people have when asked by their agent. Some people feel if the agent does not have this information the insurance company will never know and they have a better chance on receiving the lowest life insurance rates. Nothing could be farther from the truth. The insurance companies do their homework and never miss a beat. Here is a basic list of what they do to underwrite an application.
- Complete a formal application either on a paper application, online or by telephone.
- Hire a Para-Med service to send out a nurse to perform a basic physical examination.
- Request medical records from the applicant’s family Physician and possibly any specialists that the applicant has seen.
- Run a motor vehicle report to check for driving violations that could be linked to unsafe driving habits that could result in a fatal car crash.
- Check on a pharmacy database which will display prescription drug purchases from any pharmacy the applicant could be purchasing medication from.
- Run a credit check to see if the applicant is having severe financial issues that to possibly contribute to suicide.
The life insurance companies do a very thorough check to see all lines of information they need to know to make sure they properly underwrite and approve an application.
If your agent does not have accurate pre-screen information up front he or she can be having you apply with a company that will not be the most applicable company for your particular health history and lifestyle. The end result could come 4 to 6 weeks later when the company determines your final rates and they become higher than originally quoted. This could spell a lot of wasted time you and your agent which could have been easily avoided. Simply advise your agent of anything on your medical history that could be viewed as a negative health condition.
A pre-screen for medical conditions, hazardous jobs or sports is crucial to choosing the most applicable company.
We use over 40 life insurance companies to make sure you receive the lowest rates possible. Make sure you advise you agent of anything you believe could be an issue so your agent knows what steps to take to help you get the best life insurance policy for your needs and budget. This is the most important step in the application process. I am sure you would not go to the doctor and not tell him where it hurts if he asks. This is basically the same type scenario. You agent is trying to get you the best rates and he needs your help to do it.
Feel free to contact us 7 days a week with any questions you may have. Take advantage of our high tech quoting system that you can activate by completing the quoting form on the right. You can compare the best Term life insurance quotes along with Universal Life in less than a minute. Don’t hesitate to call us with any questions you may have. We are always here to help you. Take care and stay healthy!
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About the author
Jack Venturi has been a licensed insurance broker for more than 25 years specializing in all forms of life insurance products in all 50 states. Learn more about him at bestchoicelifeinsurance.com