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Why Buying Life Insurance Is Not as Scary as You Think

| March 14, 2017
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Many people know that life insurance is indispensable to a sound financial plan. They know this because life insurance helps towards protecting against some of the financial risks of an unexpected death such as unpaid debts, lost income, final expenses, and higher education costs for children. However, the thought of purchasing life insurance can cause trepidation because it is not clear what the process entails. In this blog post, I hope to diminish that sense of trepidation by explaining the basic process of obtaining term life insurance.

Step 1: The Quote

The first step in the term life insurance process is obtaining a quote from various insurance companies to compare the costs of various policies that meet your needs. To determine which policies are available to you and the potential costs, you generally will be asked a few questions about your health to estimate the rating a life insurance company will give you.

Step 2: The Application

Once you have found a policy that satisfies your needs, the next step is to complete an application. This can take anywhere from 30 to 75 minutes. Most of the questions will revolve around your health, lifestyle, and finances.

Step 3: The Paramedical Exam

In most cases, a paramedical exam will follow the submission of your application. These can take place at your home or place of business and the cost is covered by the life insurance company. The exam usually consists of measuring your basic health metrics followed by a blood draw and urine collection.

Step 4: The Underwriting Process

At this point, the insurance company evaluates the information you submitted in your application and the results of your paramedical exam. In some cases, they may request information from additional sources, such as a motor vehicle report, pharmaceutical check, and medical records. This information helps the insurance company assign a rating to your application.

Step 5: The Offer

After evaluating your information, the insurance company makes an offer. The offer may match or differ from your application depending on the rating. In general, if the offer is as good or better than what you applied for, the policy will be issued. However, if the offer is less favorable than applied for, the insurance company asks the applicant whether they wish to accept the offer.

Step 6: The Delivery and Payment

After accepting the insurance company’s offer, the policy is delivered to the applicant. Once the initial premium has been paid, the life insurance policy is considered in force.

Although obtaining life insurance can appear daunting, the overall process is not particularly complex. In addition, the process can be somewhat simplified by working with a financial professional who can help you determine how much and what type of life insurance is appropriate for your needs.

If you have additional questions or need help obtaining life insurance, send me an email at joel.everett@LPL.com and I would be happy to help!

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