A life insurance policy is an insurance coverage that provides a death benefit in terms of money to a beneficiary after you die. It enables you to cover all the end-of-life expectations, clear out outstanding debts, and provide financial assistance to your dependents after your death.
That aside, permanent life insurance policies comprise the cash value component, which can operate as an investment vehicle and source of finance during your lifetime. But it is necessary to find out who is eligible for this.
Getting approved for a life insurance policy and the benefits it carries depends on a wide range of factors, which comprise your physical condition, lifestyle choices, finances, and many more. In this article, we will discuss the essential requirements to qualify for life insurance coverage.
Find Out If You Require Life Insurance
Even before you start to understand the life insurance requirements, ask yourself if you need this insurance policy. The Insurance Information Institute states that almost everyone needs insurance coverage. Even though people’s financial and personal circumstances differ, life insurance coverage acts as an essential safety net.
It is true when the following aspects apply to you:
- Your beneficiaries and family will face financial challenges if they lose your earnings.
- Your dependents might have a huge chunk of debt to repay after your death.
- You wish to cover the end-of-life costs, which comprise burial, funeral, and medical costs.
- You intend to pay for the dependent’s daycare, retirement, and tuition expenses.
Here, you need to consider one question: What happens when you get life insurance from your employer? The LIMRA (Life Insurance Marketing and Research Association) alerts consumers against depending entirely on employer-sponsored life insurance coverage, which might not offer a profound security net when a primary wage earner expires. And within 6 months or even less, close to 44% of the dual-earning households in the United States will face financial stress.
Employer-sponsored life insurance policy is often known as group life insurance. If you have this, consider the death benefit, or the huge amount that a beneficiary will get after your death. If it is not sufficient to cater to your requirements, you can choose a stand-alone policy, which can be a great option.
The Medical Questions to Consider
You can apply for life insurance coverage with an agent, broker, or even an insurance company. The application will ask for basics, such as your name, occupation, address, and employer details. Additionally, it will ask for personal details like:
- Date of birth
- The lifestyle habits
- The current medicines you are consuming
- Health histories of your immediate family members
- Financial data that includes your net worth and yearly income
- Any risky hobbies that you might indulge in, like skydiving or rock climbing
- If there are any criminal convictions, especially moving violations when you are using a vehicle.
People might want to hide exact details about their health issues or even weight. However, this doesn’t lead to anything productive, as doing this can make the insurance company deny your application. When the company finds out about the incorrect details after the issuing of the policy, they might cancel your policy, increase the premium, or even deny the beneficiary’s claim for the death benefit.
1891 Financial Life states that one of the essential advantages of a life insurance policy is the payout offered to beneficiaries. Hence, applicants must choose one and share their Social Security numbers and date of birth details for the same.
Life Insurance Medical Exam
Most policies require you to clear a medical exam in person. An insurance agent will organize a paramedic to visit your office, clinic, or home that the insurance company selects. The paramedic will probably:
- Enquire about the medical history of your family.
- Ask for your medical history, which includes surgeries, medical conditions, or any prescription medicines that you take.
- Check your heartbeat.
- Check your blood pressure.
- Draw a urine and blood sample.
Finally, they will also ask about any current lifestyle habits that might affect your health, for instance, frequent travel, drinking, smoking, or any recreational drug that you are into. There might be other tests that you have to take based on the policy you have applied for and your age. These could be a chest X-ray, treadmill test, or an EKG.
After this, an underwriter with the insurance company will assess the application and medical exam outcome. They might ask for the medical records from your physician and learn more about your medical conditions and the treatment you received. The data enables them to understand your risk level to the company and the amount to charge for the insurance coverage.
Managing Coverage Denial
When applicants fail the medical exam, which makes the insurance company decline the coverage, there are many options to delve into. First, you need to know the reason for which you were denied coverage and look at other available options.
It is a wise decision to ask the insurance broker whether a company is interested in working with you, keeping in mind your medical status. You can also check whether you can apply for insurance that has a no-exam policy.
Additionally, when you have a policy and aren’t content with the rate, try to buy it for the time being and request a re-evaluation in the future. You have the option to check out more insurance companies to try to find the best policy that caters to your requirements and situation. You also have the option to choose group term life insurance with the help of your employer, where there isn’t any need for a medical exam.
To wrap up, a life insurance coverage policy comes with several advantages that can help your beneficiaries when you die. But to claim the benefits, it is essential to qualify for the policy. The pointers discussed in this article will help you to know about the standard requirements for application and ensure that you avert any mistakes that might deny your insurance.