The life insurance application process is made much simpler when you’re prepared. Learn more about the factors you should consider as you take on a life insurance policy.
On the whole, the process of applying for life insurance is an easy one. You still need to pay careful attention to a few key factors, however. Life insurance is not a one-size-fits-all policy! If you aren’t aware of the details your insurance company will look at, then you could be stuck with an unpleasant surprise.
Your Health and Applying for Life Insurance
If you have any pre-existing medical conditions, these may result in an exclusion on your policy in which you will not be covered for that specific condition. Alternatively, you may end up with premium loading (paying a higher premium).
Premium loading is paid to the insurance company to make them feel more comfortable taking on the additional risks associated with you as an individual. In some cases, the insurer will request that you have a medical test completed so that the company is well-informed of the extent of the risk they are taking on. Generally, the healthier you are, the cheaper your premiums will be.
Other Factors Insurers Will Consider
If you smoke, this may result in higher premiums. But if you have not smoked in at least the past 12 months then you could be considered a non-smoker. It’s best to check with your insurer directly to find out what their policy is.
Some occupations and their industries are considered high-risk. Working in these fields could make it difficult to get insurance, in some cases.
Examples of high-risk industries include:
There are also certain sports which are deemed to put you at higher risk and can result in premium loadings or exclusions (where you will not be covered if something happens to you whilst participating in that particular sport).
Examples of hazardous sports are:
Just keep in mind that your career and hobby choices will most likely affect the options available to you where life insurance is concerned.
Risks Affect Insurance Rates
If the insurer determines that your risk of death or diagnosis with a terminal illness is high – whether owing to your current health, occupation, or hobbies – they may choose to decline your application, offer a policy with additional conditions and/or charge higher premium rates.
The most important thing you can do is to tell the truth on your application. There is always a way to work with your situation. But if the insurance company finds out you withheld information, then you run the risk that they may decline the claim. You or your beneficiaries would receive nothing at the time the help is needed.
Collaborating with your financial planner will help you to determine your risk and find the most advantageous life insurance plan.
Get the financial advice you need by calling the Adelaide office of Nitschke Nancarrow on (08) 8379 9950. You can also send me an email.
– Kym Nitschke