About Applying For Life Insurance

When you complete an application, the company reviews the information you provide along with health history information provided by your physician's office (you will be asked to authorize a release of your medical records), and information from the Medical Information Bureau (MIB), a central data bank of health information. In addition, the company will usually arrange for a Paramed to visit you at their cost and your convenience to confirm your application information, and to collect a blood sample and specimen. For larger amounts of coverage or older applicants, more extensive medical work may be required. Usually, we suggest that people send in an application without sending money. Once you are approved and we send you the policy, then you can make the final decision whether to start the coverage after reviewing the policy in detail.  This way you can wait to see if, and at what rate, you are offered coverage. Then you can decide if you want to put the coverage in force.   If you apply expecting to qualify for the best health rate class but do not meet the company's standards for that class, most companies will automatically extend you an offer at the best rate class for which you do qualify. Generally speaking, companies that ask more questions and collect more data will offer lower rates than those that will accept you without a paramed visit or one that boasts it accepts everyone.  The reason is simple...when a company asks no questions, they know that a higher proportion of their application are likely to  come from people with health problems.  Therefore they price their products to cover that extra risk (and they also usually limit the amount of coverage they will provide to $100,000 or less). Insurance companies, like all companies, want to stay in business. Out of each dollar they take in, they must pay benefits, administrative expenses and overhead, marketing costs and taxes, licenses and fees. If they end up issuing policies to a block of customers who turn out to die-off more quickly than expected, the amount of money needed to cover benefits will be greater than planned for in the premiums that were charged. That means there will be less money available for administration and overhead (which means cuts in service and layoffs), less money for marketing (which means fewer sales), and it will require them to raise premiums on new policies (remember, they cannot raise premiums for existing level term life customers). Higher prices for new policies and less money spent on marketing will mean fewer sales in the future, adding further to an increasing spiral of problems that could ultimately lead to bankruptcy...something neither they, nor their existing customers or insurance regulators want. That is why they ask so many questions!