What to expect when applying for Life Insurance for Active Duty, Veterans and Military Spouses
If this subject interests you, you may have decided you need more life insurance, and want to apply for your own, individual life insurance plan. If you are a current member of the military, you may already have up to $400,000 of group coverage through the Servicemember’s Group Life Insurance plan. (See: http://benefits.va.gov/insurance/sgli.asp). If you are a veteran you may have elected to convert SGLI coverage to the Veteran’s Group Life Insurance Plan. (See http://benefits.va.gov/insurance/vgli.asp)
However, $400,000 doesn’t go as far as it used to. If you are married, have children, own a home, have aging parents or debts that you want to ensure are paid if something happens to you, you need life insurance. If you have more than one of aforementioned in your life, then you likely need more than $400,000.
If you have never applied for individual life insurance before, you may be uncertain about the process and what to expect. Actually, the process varies depending on the type and amount of the plan you purchase. Individual life insurance differs from group coverage in that group coverage is based on statistics related to a population of lives in a group. This coverage is often approved without gathering individual medical information outside of an application. Most large groups do not even use an application, they just opt-in to the coverage at certain enrollment periods, or under certain circumstances. For individual coverage, an application and some form of underwriting is almost always necessary.
You may be tempted to apply for an individual life insurance plan that promises that no one can be denied, and there are no examinations, just a few questions. You may also be attracted to a plan that gives you instant, online approval. After all, in this day and age of internet, computers, and information databases, shouldn’t you go with a company that is up to date with the times and can give you instant approval? The answer is “Not necessarily”.
Life insurance plans whose applications have just a few questions and promise no one is denied typically cost considerably more, and limit benefits in the first 2 years of the plan. Life insurance that is instantly approved online also costs more. In order to obtain a plan with the right pricing based on mortality statistics connected to your health history, it is best to apply for coverage that is subject to full underwriting.
But what is full underwriting? Underwriting is the process by which applications for insurance are evaluated and a decision is reached regarding eligibility for and pricing of coverage. Full underwriting consists of utilizing a comprehensive application, medical examinations and lab tests, medical records, as well as investigative tools and services, as appropriate, to fully evaluate eligibility and pricing of life insurance coverage. In full underwriting, you can expect, based on the amount of coverage and your age, to have a paramedical or doctor’s examination with associated blood or urine collection. Lower amounts may not require this, but they will typically require completion of a comprehensive application with several questions about your health and habits.
There are mortality statistics associated with everything from diabetes to sky diving, asthma to zip lining, and everything in between. The application will likely ask about your smoking habits within the past 12 months, your health, your foreign travel, and your hobbies. You will likely be contacted by a paramedical company and asked to schedule your insurance examination, blood and urine testing. For very high amounts of coverage in applicants over 50 or with certain medical histories, your exam may include an electrocardiogram. Some companies do saliva testing or finger-stick blood tests for lower amounts of coverage. You may be asked to fast before the exam, so it is a good idea to schedule the exam in the morning.
When you apply for coverage you typically sign authorizations that allow the insurance company to obtain medical records and information from public databases, and the Medical Information Bureau. All of this information will be used to evaluate you for coverage. If you work with an agent, he or she may have given you a quote based on the answers on your application. This is just a preliminary quote. The final price of the coverage may increase or decrease based on the outcome of the underwriting. Once an offer has been made by the insurance company, your agent will review it and present it to you. You will have the ability to accept or reject the plan even after a policy is issued and you receive the documents.
There will likely be a limited time to return the plan if you do not want it once it has been issued. Check with your agent regarding those limitations. If the rating is higher than you expect, all is not lost. You can appeal the underwriting decision, although you may be asked to provide more information to justify why the decision should be changed. You can also work with your agent to modify the amount of coverage, or the terms of the plan to bring the price down.
If you are rejected for coverage for a medical reason, you may still be able to obtain coverage through companies that specialize in underwriting applicants with certain medical histories. This coverage will likely be expensive, but it is worth looking into if you have a need for the insurance. Sometimes applicants will be postponed for coverage. This means the company wants you to wait for a specific time period, or until a specific event occurs, like a follow-up test for a health history, to reapply and be considered for coverage. Fully underwritten coverage can take time to be processed. Expect it to take an average of 30 days. It can be processed much sooner than this, or can take over 90 days depending on a variety of factors. Promptly scheduling your insurance exam and answering any follow-up questions your agent asks in a timely manner can help speed the process.
For a free consultation regarding your personal need or eligibility for life insurance, feel free to contact Michelle Smith at firstname.lastname@example.org, or at 540-710-4205. Michelle is not an agent, but can provide valuable insight into your personal situation, and advise you regarding next steps with objectivity. Michelle Smith offers fee based coaching programs including a review of your existing life insurance coverage. In this review she will fully explain the provisions and clauses in your insurance contract to ensure you fully understand how your existing individual life insurance plan works.
About the Author: Michelle Smith is an author, speaker, and certified Christian life coach. Her practice, MSL Christian Coaching (www.mslcoaching.com), specializes in career, business, spiritual and personal coaching.
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