Many of the quotes we hear are not accurate. A client will often get the best possible case scenario as a quote and truly expect to get that price. While it may or may not be possible for them to get that rate, we like to provide a range that we think it will fall in. For example, from the information that has been given to us we might guestimate a best case scenario and a worst case scenario. While it is not guaranteed to fall in that range, it is usually pretty accurate. The clients best case scenario with perfect health and underwriting might be Elite preferred. If they get a couple of black marks in underwriting then their worst case scenario would probably be standard non-smoker. The premium for the Elite preferred is that top of the range and the premium for the standard is the bottom of the range.
It is imperative for accurate quoting, to understand the potential clients current health and health history. It is also important to know if they have other factors that could knock them down, like bankruptcies and dangerous avocations. To give a quote without knowing these type of things is shooting a little bit in the dark. We want to help our clients get accurate quotes and a realistic perspective of where their policy will truly land. We would rather underpromise and overdeliver and surprise clients with a better rate than expected.
Remember a quote is a quote and an offer isn’t an offer until you go through underwriting.
What are the steps to get approved for life insurance?
1. Fill out an application with the carrier you select
2. Sign the application and submit to the carrier
3. Schedule and take the paramedical exam
4. Carrier will pull your medical records, run motor vehicle report, etc.
5. The underwriter receives all records, paramed results, and the application
6. Underwriter will either order more requirements or give a final decision
7. If approved, an underwriting rating will be assigned that will determine your premium. The best rating possible will be preferred best non-smoker and the worst would be like a substandard table 8 or 10.
8. Client determines if they want to accept the policy and the policy is issued. If the client is not happy with the result, then we can shop it to other carriers and see if we get a better rate.
The process from start to finish will take about 4-8 weeks depending on the carrier, medical history, etc. If the client has very little medical history or issues, than it shouldn’t take more than 4 weeks. If the client has extensive medical records and they have to be ordered from multiple doctors, than it can take a full 8 weeks. A lot of the time, the doctor’s office will take there time getting the records copied and ready and delay the process.
All in all, the process is really simple and easy to apply for life insurance coverage. You are not obligated, by applying and you have a choice to submit money or not with the application.
In order for you to get a valid quote for life insurance, you need to give the field underwriter (the agent) as much information as possible. I see these advertisements that say, if you are a 40 year old male, you could get 500,000 dollars of life insurance for 22 dollars or whatever. This is based on absolutely the top underwriting classification. In other words, you can get this if your health is absolutely perfect.
You need to realize that a quote is simply an estimate of what the premium will be after underwriting. After underwriting, each applicant will either be declined or receive an underwriting rating. This underwriting will be either preferred, standard, or table rated. This is why we ask several questions, before we give a quote. We want our clients to go into underwriting with a realistic expectation. If they complete underwriting and the rating is better than we had quoted, then they are happy. When you are looking to get your next quote, make sure that you have provided all of the necessary information. Anything relating to health, medications, avocations, family history, tobacco use, etc. needs to be disclosed. If you don’t you will probably be in for a disappointment when you actually apply for a policy.
When evaluating a life insurance company and whether it would be a good one to select you need to look at more than the premium. Has the company been collecting enough premium over the past few years and do they have enough money in reserves to meet their obligations? Has the company taken a hit over the last year or two with the economic downturn? Did the company invest a lot of money in mortgage backed securities and get effected when the mortgage world went upside down? Is the company accepting bailout money and/or do they need bailout money? What is the Companies ratings currently and have they been downgraded recently? Are they headed towards a downgrade?
The cost of the policy is obviously important, but the ability to pay out on the insurance in the short term and long term is the most important thing. Many of the clients we speak with are just focused on the premium cost and they lose sight of the importance of a strong financial company. I would say that more clients are looking at the financial ratings of the companies and willing to pay a little extra. On top of just the company ratings, the premium is based on your underwriting circumstances. An insurance quote is simply a guestimate. It doesn’t mean that you will get that price for your policy. Everything is pending underwriting. The main advice I would give someone is to look at the various options and make sure that the company you are selecting is financially sound. Also, don’t get caught up and assuming you will get a certain rating. The premium is not the premium until you get approved by the company at that specific underwriting rating.
Do you feel it is going to be a drag applying for life insurance? Do you dread the process?
It is not nearly as bad as you might think. Here are the basics of getting the life insurance process going.
1. How much life insurance should I buy?
2. What type of life insurance should I buy? Term, whole Life, or universal life?
3. What plans are available? Best rates and best companies.
4. Apply for the selected plan.
5. Take the paramedical exam
Once you have done these five things it is just a matter of waiting for the insurance company to come back with your insurance rating and approval. Obviously, not everyone is going to be thrilled about their underwriting rating and it is important to have a good agent who can shop it for you if necessary. On top of that, not everyone is going to get approved. If you have serious health problems, you could be declined for coverage. Your options at the point are reduced and your options are applying with another company that might be more aggressive or use a guaranteed issue company like www.presidentiallife.com. Guarantee issue policies allow just about anyone to get life insurance, but the premium is much higher than a non-guarantee issue product.
In terms of determining the amount you should buy, type of life insurance, and the best plan it is important to have a good agent. We work with our clients to help them determine those answers. They are not intuitive things and it helps to have someone who is plugged in and knowledgeable to help you make such an important purchase.
One of the important things to consider is whether the company you are buying from is underwriting conservatively and collecting the appropriate amount of premium. As a customer you want to work with a company that collects enough premium and doesn’t accept to many risky applicants. The basis of a life insurance company is the ability to pay out a benefit to you and your family. If they are not collecting enough premium now, will they have enough money down the road to pay the benefit.
We try and work with our clients to not only determine the length of the policy, but also the strength of the company and the companies evaluation process. Also, certain companies will underwrite for certain conditions more favorably and establish a niche with those types of candidates. For example, if you are a smoker than often times Prudential will be the best company for you to go with as they seem to underwrite favorably for that.
Make sure to consider if the company you are going to apply for is asking for enough premium. Typically they are, but don’t always assume the lowest price is the best way to go. Make sure you are looking at companies with at least an A rating.
You should make an investment in your child and buy them a whole life policy when they are young. Your child will be locked into that mortality for the life of the policy and the premium will never go up. On top of that you will guarantee your childs insurability for the future. When they have kids of their own, they will want to have life insurance and they will have this great policy that you bought them.
Another great aspect of having the policy and buying it early is the longer period to accumulate cash value. By the time your child has had the policy for 20 or 30 years there can be a significant amount of cash in the policy. The cash value can be borrowed against for emergency funds, college funds, or for any type of opportunity. A dividend paying cash value policy also has the feature of premium offset. Premium offset is the ability to use the dividend to pay the premium and keep the policy going, with no new funds. After a period of time, typically 10-15 years, a policy can build up a dividend that is substantial and big enough to pay the premium. I prefer to continue to pay on my policy as the more I pay, the more I fuel and grow the cash value. In fact, I put in extra money above my premium every month that goes right to my cash and buys pay up additions.
This is definitly a great present for a child that they will really appreciate when they get older.
Had a funny discussion with a client who just wanted a realistic sense of what their new life insurance policy would cost. They had the unfortunate experience of getting a very optimistic quote from an agent and applied and the policy ended up costing twice as much. This is why it is important to make sure the quote is realistic and has all factors considered. A lot of quotes given will not factor in underwriting factors such as health, medication, dangerous avocations, other risks, etc.
We try to make sure we understand all of the circumstances in play before we give any pricing information. On top of that, we shop many life insurance companies for our clients and some underwrite more favorably for different circumstances. With that being said, it is impossible to know 100 percent what the actual premium will be until underwriting is done. Many clients have not realized they had a certain medical condition and then found they had it once they did the medical exam.
All term life insurance and permanent insurance quotes are all pending underwriting. Make sure when you get the quote that everything is factored in, or you might get a big and disappointing surprise.
Let me tell you the good news and the bad news. The good news is you got approved and the bad news is you got a worse underwriting rating due to your medical exam. This really can be good news as you received approval and have the life insurance that you had sought out. It is unfortunate that you will have to pay more premium than initially was estimated. If there was a reason for the insurance company to rate you, then it may be a blessing that you were even insurable. Insurability can be fleeting and you can be insurable and healthy today and sick and unisurable tomorrow.
Don’t worry as there are often options that you can pursue to modify the premium. One options we offer our clients is the ability to shop the policy with other life insurance companies for them. S0me companies underwrite differently for certain underwriting risks and that could be helpful. The more issues that you can reveal to us up front before we apply the better. For example, if you have type 2 diabetes, there may be a company that we would have you apply to for the most favorable results. The medical exam can catch certain underwriting risks that can be a huge blessing. One of my clients didn’t know that they had high blood pressure until they did the medical exam and no are seeking doctor’s care for it. This may have saved their life, because it would have continued to go untreated.
Cheap life insurance is a common theme in todays marketplace. With rates at an all-time low it can be staggering how much life insurance one can acquire for a small amount of premium. Rates have dipped to this low level based upon the advances in modern medicine, better lifestyles, and people living longer than ever before. To get a cheap quote , all you have to do is fill out a short form and answer a few questions. To get the insurance rating you would like, you must qualify based on their underwriting standards. For underwriting, they look at your health, age, tobacco use, etc. The better you score in those different areas, the better your rating and thus a lower cost per thousand. You should be suspicious of a quote that is given without getting the important basic information from you. For example, quoting you as a preferred rating and not asking if you have any medical issues. While it may sound good to your ear that you will be preferred, it is better to get a realistic quote.
Cheap term is an interesting expression because what is cheap. To me what is cheap, may not be cheap to you. Also, is it really cheap if you pay for term for 20 years and at the end you have no insurance and your family never sees a benefit. I understand why you would buy low cost term, but isn’t there a lost opportunity cost to your family if they never see the death benefit. For a real quote you should speak to a paramount consultant.