GETTING STARTED ON THE APPLICATION PROCESS…
After you’ve done your homework and selected the right senior life insurance product that meets all of your needs, it’s time to get started on the application process.
While the exact details of the process may vary based on the specific product and provider you’re working with, everyone’s life insurance application generally goes through the same basic steps. They are as follows:
* Phone Interview
* Record Check
* Medical Examination
* Medical Record Submission
* Approval Process
* Acceptance or Refusal
Let’s take a closer look at each of these eight basic steps.
Though the application forms for life insurance vary broadly depending on the product selected, most of them ask for the same basic sorts of information. Pay careful attention to the specific questions asked on your application; phrasing can vary from company to company.
Every application starts by asking for basic contact information for you and your chosen beneficiary. The specifics of the policy you’re applying for (including type, duration, and amount) are usually also found close to the start.
This is where applications for guaranteed acceptance policies generally stop. Since these sorts of insurance policies offer approval without the need for medical examinations or underwriting, the application process is considerably simplified. Speaking generally, all you’ll need to provide is basic contact information and payment details.
Most applications progress to basic medical questions after the initial information is filled in. Different carriers ask different questions, and the information sought will also vary from product to product. The medical information required will be broadly similar within the same class of insurance policies. That means different company’s term policies or simplified issue policies, for instance, will all solicit roughly the same information.
In general, the more questions you can answer the more positive your application outcome will be. The higher your risk is, the more insurers will charge you for the coverage you need.
2. Phone Interview
Depending on your carrier and policy, you might need to complete a phone interview in addition to filling out a medical questionnaire. Some insurers use phone interviews as a replacement for medical questions while others use both. If you’re working with an agent, they may be able to handle some or all of the interview questions for you, but you should also be prepared to receive a call directly from the company and answer their questions yourself.
If at all possible, Senior Services will set up home visit with you to complete this process and can review your Medicare coverage at the same visit at no charge.
Insurance phone interviews are generally completed in 15-20 minutes. The primary purpose for the insurer is to collect more in-depth information on your health, career, and possibly your criminal background. You can expect to be asked for more details regarding any question on the application to which you answered “Yes.”
As an example, say you answered “yes” on your application when it asked you if you have diabetes. It is during the phone interview that your potential insurer will ask for details such as what type of diabetes you have, when you were diagnosed, what kinds of medication you take, and so forth. As noted above, the insurance company is gathering information to better assess risk, and they need to know as much as possible about your existing health issues.
The phone interview is also an opportunity for you to make any clarifications you need to convey. Errors are entirely possible on both your end and the insurers, so this is an excellent time to address any inaccuracies you may have noticed up to now.
3. Record Check
Once you’ve submitted your application, the next step your insurer is going to take is to gather as much applicable information on you as they can from third-party data sources. Common resources checked during this process include:
* MIB – Medical Information Bureau
* MVR – Motor Vehicle Records
* Prescription Database
Occasionally, an insurance company weighing a life insurance application will find “red flag” items in these databases which can immediately shut down the application process. One of the most common examples is that applicants whose MVR checks turn up significant DUI activity will have their application process shut down.
The good news is that insurance providers are not actively trying to turn you away.
Approval is the goal both you and the insurance company are working toward.
The insurer simply wants to verify that your risk profile fits the product in question.
If the record check reveals unacceptable levels of risk, the insurance company can save time and money by ending the application process at this early stage. If your application reaches this end, insurers will provide you with alternatives for securing the coverage you seek. They commonly offer different insurance products which are tailored for the level of risk you represent.
4. Medical Examination
Medical exams, if required, are commonly scheduled while the record check is going on. The examination delivers some useful physical information from a reliable source, and the insurance company will want to evaluate all of it. Common tests in an insurance exam include:
* Measuring height and weight (BMI)
* Measuring blood pressure
* Taking a blood sample
* Taking a urine sample
* Running an EKG
In order to ensure the reliability of the information gathered in the exam, it will usually be administered by an independent third party. Scheduling the exam will be handled either by your insurance company or the exam company – standard operating procedures vary from company to company.
Insurance exams take about 20 minutes to complete. As noted above, the exam will include weighing you, measuring your height, taking your blood pressure (may be done multiple times), and collecting urine and blood. EKG testing is often required for senior life insurance if the death benefit being applied for is high enough. Your medical history might also make an EKG obligatory.
You’ll be able to skip the medical examination if you’re applying for a simplified issue policy or a guaranteed product.
5. Medical Record Submission
Medical records are acquired by the underwriting department of your insurer from your doctors. This is typically a “behind the scenes” process that you don’t need to take part in.
Your health needs to be verified by an attending physician’s statement, commonly called an APS. You can receive an APS from any licensed medical professional you’ve consulted, including general practitioners, gynecologists, or any sort of specialist. If you’ve recently visited a hospital, it may also be able to provide an APS.
Your attention may be required in this step if your insurer has difficulty receiving your files from your doctor. In many doctors’ offices, records requests are handled slowly or in a once-a-month order push.
Calling your doctor and requested an expedited release can help speed up the application process.
Underwriting can only begin once your insurer has collected all the information described above. This is where the reduced requirements of a simplified issue policy can really speed the process up; with products in that class the process can often proceed directly to underwriting once your application is complete.
The underwriting step can cause delays because the underwriter is empowered to halt the process whenever he or she finds a point which needs to be clarified. The acquisition of more information can be as simple as phoning you up to ask more questions or as complex as soliciting additional APS from your doctors or specialists.
We recommend drafting a cover letter for your application; it will be read during the underwriting step.
While the ways insurance companies judge applicants are all broadly similar, subtle differences can spring up during the underwriting stage. The same BMI figure may be classed as “Standard” by one insurer and “Sub-Standard” by another.
7. Approval Process
The conclusion of the underwriting step is an application rating and a recommendation. Recommendations will be either approve, decline, or postpone. Ratings fall into the following range, from best to worst:
* Preferred Plus
* Standard Plus
* Sub-Standard (this rating is typically subdivided into Tables running from 1 to 10)
Smokers are typically assigned special ratings. Above the Sub-Standard ratings, smokers will usually be rated either “Select Smoker” or “Standard Smoker.”
Any rating over Standard is suitable for a premium discount. Preferred Plus will enable you to access the best possible costs for life insurance policies. When comparing the offers of different providers, you may see that costs are described in terms of “base premium.” This is the cost that “Standard” rated applicants will receive.
As mentioned above, the underwriter might make a “postpone” recommendation on your application. This is different from a flat decline. Postponement is most often recommended when your risk levels are either too high for the insurer or currently too hard to define.
Major medical incidents and driving infractions like DUIs are common causes of postponement. Most insurance companies, for example, will postpone your application if you’ve had certain sorts of cardiovascular surgery. Applicants with this sort of history are generally postponed for five years or more. With motor vehicle problems like DUIs, many carriers will postpone approval for up to 10 years to ensure that the incident represents an isolated aberration.
“Decline” recommendations are typically only issued if you present a high level of risk with no signs of potential change in the future. Applying to a different insurer may help in cases like this, but you might want to consider graded or guaranteed products with relaxed underwriting requirements.
8. Acceptance or Refusal
Following approval, you actually have choices as to how to proceed. Remember the insurer is making you an offer; you’re not obliged to accept it. Your full options include:
Accept: This is the wise course of action if you’re pleased with the rating you’ve received. The insurer will ask you to sign an “illustration” detailing what you can expect in the future and you’ll be asked to start paying premiums.
Reconsideration: You can request reconsideration if you feel your rating is unfair. Note that the underwriter’s decision can only be changed if you supply new information. Requesting a reconsideration is pointless without additional information.
Refusal: You can refuse the policy for any reason you like. If you pre-paid any premiums before refusing, they will be refunded to you.
There is a final option worth considering in special situations. This is a policy modification. After you’ve been approved, if the premium rate quoted to you does not fit your budget, you may be able to reduce it by modifying the proposed details of your policy. Adjusting death benefit amounts and duration of coverage are the simplest way to reduce your premium.
Note that policy modifications can only decrease your benefits. Securing increased benefits will require you to go through further underwriting and potentially submit more information.
Remember, if you have any questions about Life Insurance or want to learn more, we are happy to help!
We are here for you.