Frequently asked insurance questions

How much coverage will I qualify for?

Typically, one can get up to 20 times their annual income for coverage. The total coverage amount one will qualify for often decreases with age, as one nears retirement. For those that are not currently employed, it is still possible to get $50,000 – $100,000 of coverage for things such as final expenses. One will have to provide information on the application to prove they can afford the premiums, such as disability or retirement income information, etc.

It is possible to get more than 20 times your income for coverage if you have additional assets to protect over and above your income. It is also possible for a home maker to qualify for the same amount of coverage they have on their spouse, even without a separate income.

Group Life vs. Individual Life Insurance

Group life insurnace is offered by an employer, where individual life insurnace policies are purchased outside of work. Sometimes group insurance can cost less, depending on age, or one’s pre-existing health conditions. The down side is that roup life insurnace is not always portable. That means that if you leave your employer or your employer leaves you, you may find yourself without any life insurnace coverage. As with investmetns, it is good to diversify your insurance plan as well. In other words “don’t put all your eggs into one basket”. It is important to secure your own individual life insurnace policy before something unexpected occurs such as a change to employment, or one’s health. You will find a clip below where Dave Ramsey expalins this concept further:

How much will it cost to apply for a policy?

There is no cost to the applicant to apply for a policy. An application is required to get a firm rate quote. The insurance company pays for the physical exam if one is required. There is no obligation to take out a policy. Once approved for coverage, the term and coverage amount can be changed to fit one’s budget if the rate comes back higher than expected due to any health related issues.

How can I get the best results from my physical exam?

Medical Exam Tips – Q and A
Q: What is a paramed Exam?
A: A paramed exam is a personal interview to collect information about your medical history. This information allows the insurance company to perform a comprehensive evaluation of your current health. The exam usually includes recording of height, weight, blood pressure and pulse. The exam may also include the collection of blood and urine.

Q: What Happens When The Exam Is Complete?
A: The paramed exam is forwarded to the insurance company. Any specimens obtained during the exam are sent to the laboratory and the results are forwarded to the insurance company for assessment.

Q: How Should I Prepare for My Paramed Exam?
A: In order to obtain accurate information it is recommended that you:

  • Fast for 8 hours prior to the appointment
  • Be Prepared with a picture ID
  • Limit salt and high-cholesterol foods 24 hours prior to the exam
  • Avoid strenuous exercise 12 hours prior to the exam
  • Refrain from drinking alcoholic beverages for at least 12 hours prior to the appointment
  • Limit caffeine and nicotine one hour prior to the appointment
  • Drink a glass of water 1 hour prior to the appointment
  • Provide names and dosages of current medications
  • Have available names, addresses and phone numbers of any doctors or clinics visited in the last 5 years
  • Get a good night sleep prior to the examination

This video describes how to get the best results from your blood pressure reading:

Should I replace my current life insurance policy?

That will depend on your needs. One’s needs change over time. Most term life insurane policies have a premium that increases each year after the initial guaranteed level term period. If you are nearing the end of your initial term period and want to lock in a rate that won’t change for another predetermined number of years, it may benefit you to apply for a new policy and replace, or surrender the old one.

Best practices when it comes to replacement:

1) Always apply for and secure the new policy before cancelling the old one as some people find they are no longer insurable while applying for the new policy. Things may have changed in regard to ones health since the last time they applied for a life insurance policy.

2) If one already has a policy, it is necessary to indicate how much coverage you have and what company it is with, along with whether or not you intend to replace your current policy or not. One can normally get up to 20 times their annual income for a total coverage amount. If you replace your current policy, the new company will not consider that coverage amount as being part of your total coverage amount. IF you are keeping your current policy, it will be included in the calculation.

Example: One who makes $50,000/yr can get up to $1,000,000 of life insurance. If one already has a $500,000 policy and wishes to keep it, they will only qualify for another $500,000 policy as the two will total $1 million of coverage. If, on the other hand, one wants to replace the current policy for $500,000, then they can apply for $1,000,000 of coverage with the new carrier.

3) Most insurance companies are not concerned about your group life insurance coverage through work as those plans are usually not portable. This means that most group term can not go with you when you leave that employer. So when they ask for current coverage on the application, they want to know about the policies you have taken out on yourself, not about your group coverage of 1 – 10 times your annual salary at work.

Replacements in the state of New York:

If you live in the State of New York, there is an additional process to go through called Regulation 60 any time you replace a policy, or beign a new policy within 6 months of cancelling an old policy. This can delay approval of the new policy for up to a month or so, as the new carrier has to notify the old carrier of your intentions to replace the policy you have with the old insurance company. All states have replacement procedures much like this, but in the state of NY, they have an additional paperwork procedure to be sure all parties understand your intentions, and this is done as an added consumer protection. This is basically just an extra “hoop” to jump through with regard to replacing life insurance policies, only in the state of New York.

How long does it take to get a life insurance policy?

This depends on what kind of policy one applies for.

Typically a No Medical Exam policy can be applied for, approved, and put in force within approximately two business days. No Medical Exam policies are available to clients up to age 60 or so, depending on the insurance company. The coverage amount one can apply for is limited, due to the greater risk taken by the insurnace company because of the absense of a physical exam, resulting in less health information being known about the applicant by the insurnace company. For healthy applicants, these policies can cost up to twice the rate of a medically underwritten policy. However, there are people that don’t like needles, and the No Medical Exam option is a great one for that reason!

A Medically underwritten, or traditional type of term policy will typically take about 3 weeks from start to finish. This process can take longer if one has health issues and the underwriter orders the applicant’s medical records from their doctor. If this occurs, we inform our clients that they can call and ask their docotor to expedite the submission of the medical records to the underwriter in an effort to speed up the application process.

What kind of payment options are available?

Most carriers have the same rules in regard to the payment of premiums on life insurnace policies. The only way to make monthly paymets these days is to authorize a monthly automatic draft from one’s checking or savings account. For those that do not like automatic payments, there are some other options. One can receive a bill by mail if they elect to pay either quarterly, semi-annually, or annually. The majority of applicants choose the automatic payments for their life isnruance for the same reason they do for others bills such as car insurance. The main reason is that they don’t want their policy to cancel for non-payment.

Do I have to send a down payment in with my application?

You do not have to send a payment with your application, unless you want to be covered during the underwriting process (typically about 3 weeks). The majority of applicants choose to wait until their application has been approved to make a payment and begin coverage. Once an approval has been made, one can make changes to the policy to fit their budget if the rate comes back different than the rate applied for. Also, most want to know the exact cost before making a payment to begin coverage. Billing information is not necessary on the application as well. That information can be collected after an approval has been made and you have decided that you want to begin the coverage afforded by the policy.

For those that want to secure temporary insurance and be covered during the underwriting period, simply include a payment for two months premium. This premium is refundable if one decides against taking out a policy based on the final approved rate.

How can I increase the coverage amount on my current policy?

This is normally not possible. Any time someone wants more coverae, a new application and physical exam are required. It is best practice to apply for the most amount of coverage and the longest term length that you want to be considered for. Then, once we have the approval information, one can make changes to the coverage amount or term length as they see fit prior to beginning the coverage provided by the policy. Typically, changes that involve an increase to the coverage amount or term length can only be made within the first 30 days of the policy. Changes can be made at any time to decrease the total coverage amount or the term length which will result in a lower premium.

What if I have Pre-exisiting conditions? Can I still get life insurance?

This will depend on the pre-existing condition. For example, it is very difficult to obtain life insurance when one has had cancer (skin cancer is the one exception) or within 5 years of a heart attack. It is fairly easy for people to obtain coverage that have high blood pressure, high cholesterol, and/or high blood sugar, such as Type II Diabetes, as long as the condition is under control under a doctors care.

There are graded benefit and/or final expense policies available for individuals with greater health risks. The corresponding premiums will be higher depending on the severity of the pre-existing condition. It is often beneficial for an applicant with pre-existing conditions to discuss them with an agent prior to applying for coverage in order to increase the chances of a more favorable approval.

I have Type 2 diabetes… can I still get life insurance?

If you have Type 2 diabetes and it’s under control, it is fairly common to get a Table 2 health rating (slightly higher than a standard health rating) from most of the larger insurance companies in my past experience.  If you have other issues, or your diabetes is more complicated, it could cost more, due to the increased health risk.  Your best bet is to speak with a licensed insurance agent about your particular situation.  An applicaiton will be required as they look at each applicant’s health situation on an individual basis.  Once you have numbers on what kind of coverage you can get for your money, then you can decide if you want to apply for a policy or not.

What if you are pregnant? Should you wait until after you have your child to apply for life insurance?

Underwriters take pregnancy weight gain into consideration for female applicants.  The majority of women quit smoking and drinking while pregnanat, and as a result, their health improves which can often make this one of the best times for a female to apply for coverage.   In other words, additional baby weight will not increase the premium one pays, as the weight gain is taken into consideration given the pregnancy information.  Complications during pregnancy are looked at a little more closely and may increase one’s rate based on the particular health risks involved.

How much coverage can a home maker get? Does a home maker need life insurance?

A Home maker will qualify for the same amount of coverage that they have on their spouse without an independent income of their own. Insuring a home maker is important because of the role they play in raising children. If something were to happen to the home maker, that will create a new burden on the income earning spouse in the way of childcare and extra curricular activites, and is the main reason for having life insurance on a home maker. If the coverage is sufficient, it may allow the working spouse to become the home maker parent due to the change in wealth that has been created by the life insurance benefit.