What You Need to Know Before You Buy life Assurance?
Life insurance is a billion dollar industry, so it is a good idea to find an agent you trust before committing to a policy contract. A good agent should be able to review your state’s insurance underwriting guidelines and advise you on your risk levels and options ahead of time. You can choose between an independent insurance agent or an agent that works directly for a single provider.
Generally, more consumers choose to buy policies through independent agents because they can compare more providers this way, but there is no indication that policyholders who buy directly from a provider or one of their agents receive less coverage or pay more overall:
Life Individual Market Share by Distribution Channel, 2003-2012 (Based on first year collected premium)
Independent agents 1 Affiliated agents 2 Direct response 3 Other 4
Source: LIMRA’s U.S. Individual Life Insurance Sales Survey and LIMRA estimates, via III
Includes brokers, stockbrokers and personal producing general agents.
Includes career, multiline exclusive and home service agents.
No producers are involved. Does not include direct marketing efforts involving agents.
Includes financial institutions, worksite and other channels.
Regardless of if you choose an independent or an affiliated agent, it’s important to go into your consultation knowing what to ask and what the possibilities are. Here are a few questions and reminders to bring up with your agent or insurance representative.
What information does this application require?
These days, most insurers want to find out a lot about their applicants before they become customers. This means that a company might request your drivers license number and ask for permission to pull credit reports and medical records.
Overseas travel habits, risky hobbies, poor credit, too many traffic tickets, or a criminal record could impact an underwriter’s decision. This does not mean you cannot purchase life insurance, but it may mean that you will never get the most favorable rates. If you think something about your history might raise a red flag, find a good agent to help you.
The Medical Information Bureau, MIB, keeps records of serious medical treatment. These are usually reported by various insurance companies. You have the right to visit MIB.com to pull your medical history so you can see what they know about you. You can bet that most insurers will look at this information, so why don’t you review it first?
You also have the right to get free credit reports from the major credit bureaus. Visit the U.S. Federal Trade Commission (FTC) for more information about obtaining your free credit report.
What if I am declined for a certain type of coverage?
People might be declined for life insurance. Each company and type of policy will have its own underwriting guidelines.
Try to avoid declines because they will be inconvenient and might even make it harder to qualify for other policies.
Some insurers do ask if you have ever been declined before on their applications.
Get information from a good agent or your own research before you apply to avoid declines.
Despite the best efforts of qualified agents and informed consumers, declines do happen occasionally.
Getting a decline from one insurer does not mean you should stop looking for coverage.
You want insurance, and your agent certainly wants to sell you a policy, but insurance company underwriters have other priorities. They have to follow guidelines that protect the insurer against assuming too much risk.
Most people can find coverage. If something on your health or personal history raises a red flag, that means you should do more homework or get assistance from a life insurance professional. Insurers have to tell you exactly why they declined your application, and you can use this knowledge to avoid the problem in the future. In some cases, the information they based their information on could be in error, and you have the right to get errors corrected.