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You’ve decided to buy life insurance. Now what?
The life insurance application process can seem daunting at first glance, but it doesn’t have to be!
In this guide, we’ll show you how easy it is to apply for life insurance. When you’re finished reading, you’ll know how the step-by-step process from the moment you sign up to the day you receive your life insurance policy.
Determining Your Life Insurance Coverage Needs
Before you even think about applying for life insurance, you need to know how much coverage to get. But how do you know how much death benefit is enough?
When calculating how much life insurance you need, a good starting point is to multiply your salary by ten. While that should be enough to replace your income for a few years, you might also want to consider covering your debts. For this reason, you’ll also want to add your mortgage balance.
You can use one of our handy tools, which saves you time by calculating your complete insurance coverage needed.
If you are having trouble figuring out how much coverage you need, you may want to ask an insurance advisor. A qualified and experienced one can help you calculate the amount of your death benefit.
How Does The Life Insurance Application Work?
What to expect when applying for life insurance
For the most part, the life insurance application process is straightforward. First, you go through the application form with your insurance advisor. Next, the underwriter at the insurance company will review your application. Finally, if you’re approved, your advisor will deliver the policy to you.
While that’s a broad overview of the process, your experience may differ. For example, you might have to undergo a medical exam.
How do I apply for life insurance?
You can apply for life insurance in one of two ways:
- Buy direct from the insurance company by applying online.
- Work with a life insurance advisor who will help you through the process.
Out of these two options, we recommend going with #2. With option #1, there are fewer medical questions, and your premium will be much more expensive. That’s because the fewer the medical questions, the less the insurance company knows about you. As a result, it’s much riskier for it to insure you—so it will charge you more.
What questions are on the life insurance application?
When you go through the application, there are a few mandatory sections.
Personal information
The first section asks about your basic personal information, including:
- Name
- Address
- Gender
- Date and place of birth
- Residency status
- Occupation
Plan details
Next, the application will ask you about the type of insurance you’re buying:
- Term, whole life, or universal life
- Amount of death benefit
- Riders or optional benefits
- Joint insurance or single life coverage
Beneficiary details
This is where you put in the person, people, or entity that will receive the death benefit. It will include:
- Name
- Relationship to the insured
- Revocable or irrevocable
- Percentage to each beneficiary
- Name of the trustee for minor beneficiaries
- Contingent beneficiary
Purpose of insurance and source of payment
In most cases, you’re buying life insurance for personal reasons. However, there are also some business use cases for coverage.
Also, where you get the money for paying the premium is important. Is it from your income, savings, sale of an asset, or another source?
Financial information
The death benefit should make sense for your financial situation. Life insurance is meant to make your family whole after you die, not enrich it.
Among other things, the underwriter will want to know your net worth and annual earned and unearned income to paint a clear picture of your financial situation.
Insurance history
Why does the life insurance company want to know about your insurance policies? Because they want to protect against over-insurance. That’s when you have too much information based on your financial situation. You will need to list:
- Details of your existing insurance policies
- Whether this policy is intended to replace an existing policy
- Whether you’ve been declined insurance or had a policy rated
Lifestyle information
Your lifestyle plays a massive role in determining your risk level. Someone who takes part in dangerous hobbies and is a heavy drinker is more likely to die early than the average person. You will need to disclose:
- Tobacco use in the past 12 months
- Alcohol and drug use
- Participation in dangerous hobbies
- Travel outside of Canada and the US in the past 12 months and planned travel in the next 12 months
- Driving violations and license suspensions
- History of criminal offenses
- History of bankruptcy
Medical information
This is the most extensive section in the entire application. That’s because if you have any medical conditions, you have to report all the details. The section also includes:
- Height and weight
- History of medical conditions with full details of the illness, including the date of diagnosis, treatments, symptoms, prescription drugs, and the name of the specialist treating you
- Current health status and medical condition
- Name and contact of your family doctor
- Date and reason for your last consultation
- Details of diagnostic tests in the past five years, such as blood tests and x-rays
Family history
Although not important as your own medical record, your family’s medical history still plays a role in underwriting.
- History of hereditary diseases like heart attack, cancer, diabetes, and more
- Their age when they were diagnosed and their age when they died
Payments
- Will you pay monthly or annually?
- Banking information if you are paying monthly
- The preferred withdrawal date for payments
Temporary insurance
Temporary insurance means you’re covered right away. The best part is knowing you’re protected without waiting for your application to be processed, which can take a long time. The only catch is that you’ll need to pay for the first month’s premium and answer ‘No’ to a few medical questions.
How long does a life insurance application take?
Most of the questions are pretty straightforward, so the entire process should only take around 30 minutes if you have all the information prepared. If you don’t prepare ahead of time, you’ll have to dig up your files or contact your family doctor for details of your medical history.
Every insurance company has an electronic application that makes everything streamlined. Besides speeding up the application, it’s also submitted faster. This means you don’t have to wait as long to get your policy issued.
After The Application
Once the insurance agent submits the application, the life insurance underwriting process begins. The underwriter will review the information to determine your risk. If he deems you to be a higher risk than the average person, the insurance company may decide to issue your policy at a higher premium.
Sometimes, the information on the application form isn’t enough. In that case, the underwriter will request more information. This could include:
- A report from your family doctor called the attending physician statement (APS) for more details on your medical conditions
- A medical exam to get a clearer picture of your current health status
Everything you need to know about the medical exam
To get a clear picture of your current health, the life insurance company may order a medical exam at no extra cost to you. This is also known as the paramedical exam.
During the medical exam, a medical professional will take several measurements. He will measure your weight, height, and blood pressure. Besides those, he will also take a blood and urine sample. With these in hand, the underwriter will get a better picture of your health.
Because of the importance of the paramedical exam, you should prepare for it to get the best results. That means getting a good night’s sleep the day before, avoiding caffeine, avoiding heavy exercise, and more.
If you’re about to go for your medical exam, you’ll want to check out our post for tips on how to get the best results.
The life insurance company issues your policy
Finally, we’ve arrived at the last step. The insurance company approves your application and issues your brand new life insurance policy. Now you’re covered, getting the peace of mind that you need to protect your family.
How long does it take from beginning to end? The short answer is: it depends.
If your health and lifestyle are average, it could take a week or two. If you have some health concerns, need to do a medical exam, and need a physician report, it could take a longer time.
If your application is denied
One of the worst feelings is having your application declined. If this happens, most of the time it’s because of a medical condition or lifestyle issue. You may try to get it submitted to another company, but chances are you’ll get the same result.
At this point, you can ask your insurance advisor for other options. He may be able to find you a company that’s willing to offer you coverage. These are called non-medical insurance policies because they don’t require a medical exam. Also, they don’t scrutinize your medical conditions as much. As a result, these policies don’t take a long time to issue and have higher premiums.
Is the application for term life insurance different than permanent?
Although you’re applying for entirely different products, the application is similar. You have a few more questions specific to permanent insurance. For example, you can choose a dividend option with participating whole life insurance. You can also choose investment options with a universal life insurance policy. These are some things that aren’t applicable to term life coverage.
How is a non-medical life insurance application different?
Non-medical life insurance is one where a medical exam is not required. Also, the lifestyle and medical sections of the application are much shorter. Because of the quicker underwriting, you don’t have to wait as long for your application to be approved.
You can buy both term life and permanent life insurance with the non-medical method. But keep in mind that a non-medical policy will be more expensive than a fully underwritten policy.
Are You Ready To Take The Next Step?
Now that you know all about applying for life insurance, are you ready to take the next step?
If so, we can help walk you through every step of the application so that when your policy comes in, all you need to do is enjoy the feeling of being properly protected from financial disaster with affordable coverage.
Feel free to reach out if you have any questions or want to know more about the benefits of life insurance.
Brian So, CFP, CLU, CHS, BSc
While we make every effort to keep our site updated, please be aware that timely information on this page, such as quote estimates, or pertinent details about companies, may only be accurate as of its last edit day. Brian So Insurance and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser. This post is a brief summary for indicative purposes only. It does not include all terms, conditions, limitations, exclusions, and other provisions of the policies described, some of which may be material to the policy selection. Please refer to the actual policy documents for complete details which can be provided upon request. In case of any discrepancy, the language in the actual policy documents will prevail. A.M. Best financial strength ratings displayed are not a warranty of a company’s financial strength and ability to meet its obligations to policyholders.
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