Life insurance is an important part of your estate planning strategy. You can use it to provide money for your children's education, cover your funeral expenses, and leave money behind for loved ones. Understanding what to expect and what is required for the application can help make the process easier.
Below you’ll find a list of what you’ll need to complete the application, what your medical examination might include, and what to do if you don't pass the health requirements. As you begin researching options, your financial advisor or insurance agent can help you decide which policy best suits your needs and budget.
Information Needed for the Life Insurance Application
If you could just pick a policy and pay the premium, buying life insurance would be simple. Unfortunately, there are a few more necessary steps.
To start, you’ll want to choose between permanent (whole life or universal life) and term life insurance. A permanent life insurance policy covers you for your entire life, while term life insurance covers you for a set number of years. Speak with your insurance agent for more information on the differences in policy type.
Other decisions and information you’ll need include:
- Calculate how much coverage is needed (based on spouse's earning potential, your children's age, current debt levels, monthly expenses, and more).
- Decide the frequency of policy payments (annually, semi-annually, quarterly or monthly).
- Review other life insurance policies you may already have. If you already have life insurance or are applying for more than one policy, this may cause the insurer to question why you need additional coverage.
- Income earned annually.
- Your net worth, including assets such as real estate, stocks, and cash assets.
Even though you undergo a medical exam as part of the application process, you should still expect medical questions. These questions may include:
- Date of birth
- Lifestyle habits
If you smoke, drink or have other lifestyle habits that the insurer considers a risk, it may impact your eligibility for life insurance or the price you pay for your policy.
What Can I Expect During the Medical Exam?
The medical exam for each insurer may vary slightly. However, you can expect to undergo an in-person medical exam at a location approved by the insurance company. For some, this is the most uncomfortable part of the process.
During the exam, a medical professional guides you through the requirements, which may include:
- Documentation of your medical history (including surgeries, prescription medications, and other details)
- Details about your family's medical history
- Current blood pressure
- Current heartbeat characteristics
- Height and weight
- Blood and urine samples
- Questionnaire or interview about lifestyle habits such as drinking, exercise, smoking, recreational drug use, travel, and certain risky hobbies
There may be other tests depending on what policy you choose, your age, or the amount of coverage needed. These could include a chest x-ray, an EKG, or a treadmill (stress) test.
What If the Insurance Company Denies My Application?
If an insurer denies your application, your options going forward depends on the reasons for the denial. If you were turned down due to health risks, you can seek a policy that doesn't require a medical exam. These policies, however, can cost more money. You can also seek life insurance through your employer during an open enrollment period, in which case a medical exam may not be required. Additionally, you can wait, improve health conditions under your control, and try again later down the road.
Your insurance agent can help you choose a policy that works best for you and enables you to leave a legacy for your beneficiaries. In the meantime, consider making healthy lifestyle choices that make it possible for you to support your dependents for a long time to come. This will help you keep your premiums down and let you get as much life insurance as your budget allows.
Erickson Braund is the Founder and Chief Financial Officer at Black Walnut Wealth Management. He is a Certified Financial Planner®️ professional and a Chartered Retirement Planning Counselor®️. Eric brings over 20 years of experience working with high net-worth individuals and families, helping them achieve their goals of protecting and growing their wealth for retirement and for generations to come. Because Eric is a CFP®️ professional, he adheres to high ethical standards and engages in at least 30 hours of approved continuing education in the financial industry each year.
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