Making An Application For A Life Insurance Plan
Life insurance coverage is an important component of financial planning. Not everybody pays exactly the same rate for similar life insurance policy. The process in which the insurance company determines who is eligible for an insurance policy, and what they will pay for it is called “underwriting”. There are numerous factors in underwriting an individual life insurance policy. These include, but are not limited to age, general health, health background, profession, sex, lifestyle as well as pastimes.
When the results of the underwriting evaluation determine that the person is insurable, they’ll then usually be issued a risk rating. Men and women applying for term life insurance who are of the lowest risk are regarded as “preferred”, and obtain the lowest rate. How the rating is given is different from one company to another, and this is the reason why it is recommended that those who fall into the “rated” category, and therefore have to pay higher premiums shop around for the best rates.
To take out a life insurance policy on someone, you must have what exactly is known as an “insurable interest” in that individual. This is in order to prevent life insurance from being used for nefarious purposes, such as taking out a life insurance policy on a complete stranger without his or her knowledge and then hoping to cash in on it. Insurable interest means the individual for whom you are buying the insurance should be a spouse or other close relative that you depend on for some support, or whose death would cause you financial or other personal harm. For the purposes of buying life insurance, all people are assumed to have insurable interest in their own lives. Generally speaking, even if an individual has an insurable interest to you, like a spouse, or business partner, you cannot take out a life insurance policy on him or her without his/her knowledge.
Life insurance providers are regulated by the individual states where they are licensed or authorized to sell insurance. There’s not a federal regulating body for insurance. The name of the regulating body differs from state to state. Before getting a life insurance policy, you should consider your finances and also the standard of living you like to maintain for your dependents. For example, who’ll be responsible for your funeral costs and final medical bills?
After you settle on a life insurance agent or life insurance firm, and kind of life insurance, the process to buy a life insurance plan begins with an application. The application has a number of questions; your answers will be used by the life insurance provider to decide whether they are going to insure you, what terms they’ll offer, and exactly what premiums they will charge. The main factors which life insurance companies consider are age and overall health, specifically if you are or were a cigarette smoker. Be sure you complete the application form as accurately as possible. Any discrepancy or failure to disclose may lead to the insurer refusing to give the benefit once you die.