Qualify for insurance you say? Do I have to qualify for life insurance? When an application is submitted for life insurance, the company's underwriter considers the applicant's level of risk to the company, determines the acceptability of that risk and the price (premium) that will be charged. Life insurance is bought not just with money but with your health, and other factors.
What are some of the factors that the underwriter considers?
- Age - Gender
- Health - Employment
- Income - Financial position
- Occupation - Lifestyle
Also, did you know?
- You credit score informs your level of responsibility
- Your driving record informs your level of responsibility
- Rates for females are lower than for male at the same ages
- The younger and healthier the applicant, the more competitive the premium
- Some occupations are considered more risky than others, for example
- Aircraft Pilots
- Underground miners
- Loggers
- Active military
- Electric power line construction
- Firefighters
- Natural gas industry workers
- Risky or hazardous lifestyle activities include
- Scuba diving
- Race car driving
- Bungee jumping
- Parasailing
- Smoking
Do you see how the level of risk could affect the decision on accepting these risks?
Let us think this through:
- You go to insure your home - The premium is determined by vulnerability to natural disasters, age of the building, location, materials from which the building was made, replacement cost, among others.
- You go to insure your motor vehicle - The rate is determined by factors such as
- Age of the vehicle
- Mileage / Annual mileage
- Driving history of the would-be insured driver/s
- Gender of the would-be driver/s, among others
Do you see the connection?
In the same way that your assets are assessed for consideration for insurance, so too are you assessed for life insurance. At some levels, the company requests a medical to help with the decision making process. If the underwriter determines that the risk is acceptable, the premium would be at standard rate. If, however, the risk is considered risky to the company, the premium would be offered with a rating, a cost above the standard rate. The applicant then accepts or refuses the offer.
My message to younger adults:
Purchase as much insurance as you can while you are young and healthy. This will protect future needs at a more competitive rate. It also protects you in the event you become ill at a later date
And to more mature adults:
- Although based on your age and maybe health condition your premium might be higher, ensure that you cover you burial and final expenses with life insurance. If not previously covered, and you are unable to cover the balance on your mortgage, insure a portion. This will allow your surviving
family members to cover mortgage payments for a period and give them time to decide on future moves. A little insurance is better than no insurance at all.
Think on these things, and especially during this pandemic!
** Partially reproduced from my upcoming book, "How to write a will - DON'T let the state write your will for you" to be on the market in short order.
Gloria Isaac
Independent Life Underwriter
Linkedin: https://www.linkedin.com/in/gloriaisaac/
Twitter: https://twitter.com/GloriaLIsaac
Website: https://GloriaIsaacInsurance.com
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