You might never have really thought about what it takes to qualify for a life insurance policy or what affects the premiums you pay. By the time you get around to figuring it out it could be too late. Here 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 even qualify.
Your Age
The older you are, the more you will pay for life insurance. When you take out a policy at a younger age, the company expects that you will be paying the premiums for a much longer time period, and therefore your monthly payments will be smaller. The older you get, the shorter the time period during which they can expect to receive payments from you. This means they will increase the premiums accordingly. Your age also has an impact on your health. The older you are the more likely it becomes that you will develop a serious health condition that could make it even more likely the company will pay out on the policy.
Your Health
Everything about your health will be taken into consideration when you apply for a policy. Most companies will require at least a questionnaire filled out, if not a visit from a doctor or nurse to check up on your overall health. This includes things like your weight to height ratio to determine if you are overweight, blood tests to check cholesterol and look for serious illness, and sometimes more. They will ask about your lifestyle as well as smoking, drug, and alcohol use. Even what seems like a minor health issue can result in a higher premium amount, because it could develop into something more serious later on.
Smoking
If you are a smoker, it will cost you more money when purchasing life insurance. If fact, you have to be smoke free for one year in order to get a non-smoker rate on a policy. But, do not despair, if you are a smoker who is in process of quitting, go ahead and get your policy now. Then, just after your one year anniversary, request that the insurance company re-test 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 do have an illness, insurance companies want to know your actual diagnosis, what medications you are taking, how much of it you are taking, and how many times per day. Additionally, they will want to know the name of the doctor, the address of the doctor’s office, and when you were diagnosed. Depending upon the illness, the insurance company could request health information from your doctor. Now that the new HIPAA laws are in place, that will extend the time to get you insured. If you are on a time crunch to get insured, start the process as quickly as possible. If you have had a major illness such as diabetes, cancer, or any type of heart disease, remember to disclose that up front. Your disclosure will save you from allot of heart ache and frustration. If you have a major illness, such as cancer, heart disease, or diabetes, then it could be more difficult to find coverage, so be patient through the process.
Athletic
For those of you like myself that take care of yourself, there are companies that offer an athletic rating. This is for people that are “amateur” athletes. If you exercise all of the time either through some organized sports or some rigorous workout and you body is in great shape, then this might be an option for you. Remember though, that in order for you to get the rating, the insurance company is going to be rigorous in their assessment of you. Make sure that you have your patience hat on. But, if you qualify, this could save you some money.
Your Occupation And Hobbies
If you have a dangerous occupation such as a firefighter, or engage in potentially dangerous activities like certain sports, this can affect your eligibility for life insurance as well as your premiums. When you put your life in danger either at work or at play, the insurance company sees a higher risk of paying out on the policy. In some cases they may deny you altogether simply based on the activities you engage in regularly.
Some hobbies can mean the difference between your getting and not getting covered. Some examples are skydiving, scuba diving, and rock climbing. Several years ago I had a client that got declined because he was planning on scuba diving within the next 90 days. He vacationed every year near water. Some of those years he would spend scuba diving, some not. Since that year was a year he planned to enjoy his intermittent pastime, he did the right thing and disclosed. As a licensed professional having to deliver that decision was not pleasant, but if he had not disclosed that and somehow he was killed accidently while scuba diving…Well… the insurance company would have the right to decline coverage.
These are some of the major factors leading to insurance company decisions regarding life insurance premiums and whether or not you qualify. Some of them can’t be changed, while others can-and you should take them all into consideration if you want to get the best rate on your policy. Lastly, let me just say that there is never a time when you should not tell the truth. If the insurance finds out that you did not tell the truth and you have died already, they do have the right to decline your coverage.
Death Benefit
One other factor that you may not have considered is death benefit. Some companies offering insurance at a cheaper rate if you by more insurance. For example, let’s say that there are two people, same age, same sex, no health issues…Everything about them is the same, but one person wants a $150,000 worth of term and the other wants $200,000. Some companies will offer a discounted rate at the $200,000 death benefit level as well as at other points up to the $1 million level. Make sure that you know where those discount are if they are available through that company. It could save you some money.
Felonies
Recently, there have been a fair share of clients that have come across my desk that have felonies. The reason for the felonies are unimportant. However, here is what you need to know. In general, insurance companies have a rule to decline insurance somewhere between 2 and 5 years from the date of the felony charge. Every company has their specific guidelines for this issue.
All of the issues above can affect whether or not you get insurance. Maintaining good health is the most important factor for getting insured. Make sure that you do not smoke. If you do, get the insurance you need, stop smoking, and then get retested one year after you have not been smoking for a year. Whether you are totally healthy or not, it is not a good idea to wait to purchase after you are completely healthy.
