Life Insurance: Why Do I Need a Medical Exam?

 

When applying for a Greensboro life insurance policy, part of the underwriting process may be for you to submit to a medical exam.  Not all life insurance providers require applicants to undergo a medical exam as part of their underwriting prerequisites and some insurers even offer "no-exam" life insurance issuance.

For a "no-exam" policy, however, you'll be required to pay a greater premium amount than those charged for a standard life insurance policy.  Sometimes the cost can be as much as double.  The reason for the additional cost is because an insurer is taking on additional risk when they write you a policy without knowledge of your health history or your current state of health.  These policies may also have limited coverage options and include a waiting period of up to two years before payment benefits are available.

Getting Greensboro Life Insurance Without Getting a Medical Exam

In line with all types of insurance, the cost of a life insurance policy is proportional to the amount of perceived risk being taken on by the insurer.  The underwriting process your insurer goes through to determine whether a policy should be written and, if so, the amount of premium to charge for a particular policy involves figuring the relative amount of risk being insured.  With life insurance, the purpose of a medical exam is to provide your insurer with an in-depth snapshot of your health status.  

The results of the exam combined with the answers you provide on your insurance policy application should allow your insurer to determine which risk class you fall into.  These classes include:

• Preferred Plus
• Preferred
• Standard
• Substandard

The better your risk class, the healthier you are presumed to be, with a greater life expectancy, translating to lower premiums for your policy.

There are several ways of obtaining a life insurance policy without taking a medical exam and without going the more-expensive "no-exam" route:

Simplified Issue Life Insurance - this includes a health questionnaire that provides a general sense of your health.  The standard upper limit for death benefits on this policy is $500,000.

Guaranteed Acceptance Life Insurance - also known as guaranteed issue or final expense insurance, this policy is often used to pay burial and other end-of-life costs and is typically available limited to $50,000 or less.

Group Life Insurance - typically offered by your employer as part of a benefits package.  Benefits are generally low.

Decoding Life Insurance Quotes: 4 Tips

Life insurance is (or should be) an important part of nearly every household's financial plan. If it's not part of your family's financial base, it may be that you find life insurance too confusing or complex or maybe you're just adverse to the idea of considering the topic of your own or your spouse's demise. These are not uncommon reasons for avoiding the subject of life insurance.

Who Needs Life Insurance?

Simply stated, life insurance is an obligation for anyone on whom someone else is dependent for financial support. Whether this dependent is a spouse, a child, a parent, a sibling or a partner, if your death would mean a significant financial loss for another person, you need to have life insurance. If you're retired with a secure income or independent financially and no one would suffer financially at your sudden death, then you probably don't really need life insurance.

Two Types From Which To Choose

Life insurance is divided into two types – whole-life (permanent) and term-life. Term life is the least expensive and simplest form. With term life, the insurer sets the cost of the policy according their perceived risk of your dying within the term, which is typically 10, 20 or 30 years. If you die within the term of the policy the stated death benefit is paid to your named beneficiary.

Permanent insurance uses the same “risk of death” assessment for helping determine premium cost but also features a savings component, referred to as the cash value. You'll find three types of permanent life insurance – whole life, universal life and variable life. What differentiates these from one another is the way the cash value funds are handled.

Decoding Life Insurance Quotes

Here are four tips for decoding life insurance quotes:

1.     Use an independent broker with access to multiple life insurance companies to get multiple quotes side-by-side.

2.     Life insurance costs are determined by your age and health. This is a competitive business and most life insurance companies offer about the same policy costs.

3.     Insurance costs are the same whether you buy online, from an independent agent or straight from an insurer. There may be differences, however, in service quality. An independent broker can help you find the best companies.

4.     If you have a particular health issue, your broker can steer you toward an insurer that may be more lenient to individuals with your condition.

Greensboro Life Insurance: When and Why to Buy More

There are many reasons you could probably come up with for buying life insurance. One of the more commonly cited is because a college friend, recently recruited into the insurance business is making his rounds pitching policies to all his friends and you happen to be one of them. In this case, you could say you didn't really buy life insurance as much as it was sold to you.

But whatever your motivation for taking the plunge - maybe you've recently married and want to provide financial stability protection for your spouse or you've just taken out a mortgage for a new home and don't want to leave that financial burden to your family in the event of your premature death - taking out a life insurance policy is always a selfless act.

The only real benefit you'll ever get as the named insured is the peace of mind of knowing you're looking after the welfare of your policy beneficiaries. In reality, life insurance could more aptly be termed "death insurance," as its main purpose is to pay out financial benefits at the time of death, which is money the insured will never see. One thing's for sure - everybody dies. This means every in-force life insurance policy will eventually pay out a death benefit to the insured's beneficiaries. The only unknown is when this will occur.

When and Why to Buy More

As in the previous example, buying your first policy from an old college buddy, the face value of such coverage is typically something small such as $10,000. In the event of your death early on, this may be just enough to cover your funeral costs, relieving your beneficiary of the financial hardship of having to take on these costs.

As time goes on, however, and you get married, have a couple of kids, take on a home mortgage, car payments, credit card debt and other financial obligations, the amount of money needed to settle your affairs in the event of an early, untimely death will be much greater. At each of these milestones, taking out additional life insurance coverage is something you must consider. If you were to die tomorrow, how much would it take to pay all your outstanding debts and provide sufficient income to keep your family financially secure and educate your children? This is the amount of life insurance you should be carrying right now.

How Much Life Insurance Does a Single Parent Need?

A 2011 study found that approximately 70% of single parents are living without life insurance coverage (University of Virginia's Darden School of Business). This is in spite of the fact that single parents are possibly the one group that's most in need of this type of insurance coverage due to the vulnerability of their children's welfare in the event of an untimely parental passing. Whether you currently have no life insurance coverage or you're wondering if the coverage you have is adequate for your requirements, we have some information that can help determine just how much life insurance you likely need.

How Much Income Must Be Replaced?

As a single parent, if you were to be taken away from your family through a premature passing, the amount of income you're currently producing may need to be replaced in order to allow your kids to continue their lives in some semblance of financial normalcy. The current age of your children should be considered as well as the financial condition of your chosen guardian.

If the kids will be going to a family member who is relatively financially secure, the amount of life insurance you now carry won't need to be as much as if they'll be going with a guardian for care without enough current income to deal with the additional expense associated with taking care of your children. A commonly accepted rule of thumb says the face amount of your insurance policy should be equal to at least half the amount of your current annual salary for the total number of years until your children reach adulthood and are able to financially fend for themselves.

If you see college in their futures, this amount would need to be increased. You'll also have to factor in an amount equal to your funeral and burial costs and all of your outstanding debts, since creditors will likely go after your estate to recoup this money, and this will happen before any death benefit payouts go to your beneficiaries.

How Much and What Type of Insurance  

                                       

For a single parent, a balance must be made between the need for X amount of life insurance coverage versus the ability to pay the premium on this amount of protection. The best option is to buy term insurance, which is more affordable than whole life, and to take on a premium payment you know you can handle.

6 Risks That Increase Life Insurance Rates

When shopping for life insurance, there are a number of factors your prospective insurer will consider when determining your acceptability as an insurance risk and, if eligible for insurance with their company, the premium they'll charge. These life insurance rates will be determined using general factors such as age, gender and your health profile, and will also take into consideration any types of high risk behaviors you may demonstrate.

Bear in mind -- not every life insurance company looks at risk the same way. An example of this may be the pursuit of scuba diving. Some insurers may consider scuba diving a high-risk hobby and, as a result, increase the life insurance rates of policyholders who regularly scuba dive. Other insurers may not consider this a high-risk past-time, but may penalize you with higher life insurance rates if you like to race at the local drag strip on weekends. If you're a professional race car driver, you may find that some insurance companies will actually decline from insuring you altogether, while others may sell you insurance with a higher premium, sometimes much higher, than someone they consider to be a “normal” risk.

Risk vs. Reward

To life insurance companies, it's all about risk versus reward. They have untold actuarial data that tells them what their chances are when insuring a certain individual. They're in business to make a profit, which means they must be right more times than they're wrong when issuing someone a life insurance policy.

They're weighing the risk of you living or dying against the amount of premium you and others pay to secure your coverage. Following are some of the risk factors many insurers consider above average and that will likely cause your insurance premiums to increase compared to a more normal-risk individual. Consult your life insurance agent for information on specific companies.

1. Current health problems, including high blood pressure, as well as past history of health issues may both result in higher premium rates.
2. Overweight or obese individuals, based on weight to height ratios, are generally considered higher risks and will typically pay more for insurance.
3. If you have what's considered a risky job (see table here), this will be reflected in your life insurance rates.
4. Family health history such as heart disease or cancer will likely make you a high insurance risk.
5. & 6. Smoking or heavy drinking will both play against you when buying insurance.