Consumer's Guide to Purchasing Term Life Insurance
By Lori Morrell
“Low cost term life insurance—apply now!” “Save 70 percent!” “A 40-year-old male can have coverage of $500,000 for only pennies a day.” Are the television and radio commercials and internet advertisements true? Is term life insurance that cheap or that easy to acquire—as simple as purchasing a gallon of milk? The answer to these questions can be yes, or sometimes no, depending on the circumstances.
There are simplified issue life insurance plans that you may apply for on the Internet. Usually they require a quick chat over the phone with a licensed agent, perhaps an electronic signature and a credit card. Many times the policy is available in mere minutes. You may pay more, yet the coverage is immediate.
For the really, really low-cost plans, underwriting is required. The life insurance company looks at you in more detail. For this, they require a physical exam. The agent will arrange with you a time for the medical examiner to come to your home. These exams are paid for by the insurance company. Applying for life insurance requires no additional out-of-pocket expense to you, the consumer. This process allows for a third party to access your heath by taking key health metrics. These include blood pressure, pulse, height, weight, and a blood and urine sample. The examiner will also ask you questions concerning your medical history. In some instances, the exam may even include an EKG. This all can be done in your home or office, depending on your preference.
Most people do not mind the visit by the medical examiner; however, many individuals have complaints concerning the blood test, the unreliability of the weight scale that the examiner brings or simply the inconvenience of cleaning up their house.
For extremely healthy people, the exam, along with the initial quick chat with a licensed life insurance agent, are the only hindrances to a very low cost term life insurance policy with the same guaranteed level premiums for 10, 20 or 30 years.
However, in many situations applying for life insurance may take considerably more time. Sometimes, a couple applies together and one application is quickly processed, while the other spouse may take upwards of three months. Or, in some instances the price originally quoted does not match the final offer from the insurance underwriter at the life insurance carrier. The reason for these seeming discrepancies is that insurance offers are based upon the applicant's health, medical history, driving history, travel plans, build, and lab results.
If you have a condition such as controlled blood pressure, elevated cholesterol or heart palpitations, you will pay more for your life insurance than someone without these conditions. In order for the life insurance company to assess your risk (your life insurance premium) they will require copies of your medical records. These are called Attending Physician Statement (APS). By signing your application, you give permission to the insurance company to access these records. In many instances, the doctors may want their own permission forms to be signed by you, their patient. This may increase underwriting times. Sometimes in situations like this, a helpful call from the applicant may speed the process.
Occasionally, a life insurance underwriter may request additional paperwork from the applicant and this is done through the life insurance agent. It is in situations like this that someone on the agent's staff may contact you to answer an additional question. It is a good idea to respond to these requests quickly to improve the processing time for your policy.
Finally, an offer is made from the insurance company. It may be exactly what you were quoted at the outset, or you may be offered the coverage at a slightly higher premium. If this is the case, your agent should be able to explain to you clearly how were the rates were derived and why there is a difference.
A mistake that the general public frequently makes is to immediately decide to apply elsewhere. This is an understandable reaction. Yet insurance companies keep track of where you have applied and for how much. This prevents fraud. Therefore, it is in your best interest to consider the offer and take some time with the plan. If your health improves through diet and exercise or if you decide to swear off bull fighting or other risky activities, then it may be time to reassess your life insurance coverage. However, during that time you will have the protection life insurance provides to protect your family from the loss of you.
Sure, a life insurance purchase takes more time than buying milk, but over time it is more satisfying.