02 Nov The Wide Range of Qualifying for Life Insurance
Difference Between Guarantee Issue Life Insurance and Medically Underwritten Life Insurance
Life insurance terminology can be misleading, leaving people confused and frustrated. There is a wide difference between the products life insurance companies offer, on the far left is guarantee issue life insurance and on the far right is medically underwritten life insurance. Unfortunately, most people are incompetent when it comes to the process of getting life insurance and make assumptions that end up costing them thousands of dollars in the long run. Commonly people assume the pricing between life insurance companies are probably similar but premiums can be two to three times more expensive with one company over another for the same death benefit. Additionally, people think they can get a competitive life insurance policy put in force within minutes and don’t realize life insurance underwriting takes time, underwriters need to analyze health history, medications, hazardous occupations, family history, driving record, credit, and any other pertinent information which typically takes three to six weeks before the underwriter makes an offer. Over the last few years life insurance companies have added living benefits to the policies for terminal illness, chronic illness, or critical illness, which will accelerate the death benefit before the insured passes away. Quality of life living benefits are riders that can be included with your life insurance at no additional cost, these accelerated death benefit riders allows you the ability to collect on your life insurance policy before you die if you have a triggering event such as heart attack, stroke, cancer, and several other critical conditions. Ideally every person who has a need for life insurance has a policy with full living benefits and the correct amount of death benefit that will protect their loved ones in the event the unexpected happens.
Guarantee Issue Life Insurance
If you apply for guarantee issue life insurance you cannot be turned down for health reasons which sounds great in theory but get ready for some serious sticker shock and typically extra conditions in the early years. Take a step back and think about it, why would an insurance company just hand out free money? If the company knows you are likely to die sooner than later why would they want to lose money and put themselves on the hook for paying out a death benefit? Life insurance companies are some of the smartest corporations in the world when it comes to analyzing risk and being profitable. That being said, there are a handful of life insurance companies who offer guaranteed issue life policies and people do not have to answer any medical questions when completing the application, therefore it is the quickest way to obtain life insurance. Normally, guarantee issue policies will pay out a graded death benefit equal to 110% of the premiums paid during the first two years from the issue date and the full-face amount in the third year and beyond with a cap of $25,000. These limitations make this type of life insurance inadequate in most situations for a business loan or divorce settlement. Furthermore, the insured must be the owner and typically there is language in the life contract that the policy cannot be transferred. Additionally, no death benefits are paid in the event the insured voluntarily does something to end their life. When analyzing the cost of the premiums and exclusions, often times people will just put the money into a flexible premium deferred annuity or other account that will create liquidity upon death. Guarantee issue life insurance is not a good financial decision if someone has two years or less to live, in addition if someone lives longer that five years they will usually pay more in premiums than the beneficiaries will collect in death benefit. At the end of the day guarantee issue life insurance has a lot more sizzle than steak and generally leaves people unsatisfied after they crunch the numbers.
Simplified Issue Life Insurance
Simplified issue life insurance differs from guaranteed issue life insurance because the applicant has to answer a few questions about their medical history and ultimately the life insurance underwriter can decline the application. However most of the time people are accepted and approved for life insurance within hours or days because there are typically only a few medical questions, therefore simplified issue is ideal for people looking to get coverage as soon as possible at cheaper rates than guarantee issue life insurance. Typically, simplified issue life insurance policies have higher death benefit caps than guaranteed issue which can make it a better solution for someone who does not want to complete a paramedical exam and needs a life insurance policy as quickly as possible; for example, someone who just took out a $100,000 loan from a bank and needs a collateral assignment life insurance policy in order for the loan to get finalized. Generally, a person cannot get more than $150,000 of simplified issue life insurance which makes it unsuitable for someone who needs a higher death benefit.
Non-Medical Life Insurance
Several life insurance companies offer up to $250,000 of life insurance without making the proposed insured complete a paramedical exam. Non-medical life insurance policies typically only offer non-tobacco or tobacco rates which could cause people in good health to pay more than they should because they could qualify for preferred rates if they were to complete a paramedical exam. For people in fair to poor health non-medical life insurance could be a great deal because they might be living with an undiagnosed medical condition and legitimately qualify for life insurance. For most applicants, non-medical life insurance is a fairly streamlined underwriting process and they are approved within 24 to 48 hours. Occasionally the life insurance underwriter will ask the insured to complete a personal history interview over the phone in order to verify information and gather more details if necessary and the underwriter can still require the proposed insured to complete a paramedical exam but this is unusual. Non-medical life insurance polices are almost always less expensive than a simplified issue policy, also non-medical policies generally allow for higher death benefit amounts than simplified issue.
Express Plus Non-Medical Life Insurance
Fairly recently life insurance companies released an underwriting program where they complete an intensive background check that verifies just about everything you can know about a person. If everything is all clear the application gets green lighted and approved at the best rate class possible without having to complete a medical exam. Typically the maximum death benefit for this program is $1,000,000 of life insurance coverage, only about ten percent of the time does the proposed insurance get approved without having to go through the paramedical exam process.
Medically Underwritten Life Insurance
If you want to purchase life insurance at the lowest cost, you should consider a medically underwritten life insurance policy. Proving your health to an insurance company can save you a lot of money over the length of the life insurance term. Usually in order to get the best rate class for life insurance you need to complete a paramedical exam which typically involves drawing blood, taking a urine specimen, measuring vitals, height, weight, and asking medical questions. Insurance companies will sometimes take it a step further and make the proposed insured complete a personal history interview and sometimes an interview by underwriter. Going through the medically underwritten process allows the insurance company to offer the the best rate class possible. Commonly applicants who appear to be in great health physically find out they have elevated readings on their lab results which ultimately knocks them out of getting super preferred rates. When determining the applicants rating life insurance underwriters analyze the blood chemistry results for:
· HGB A1C
· Alkaline Phosphatase
· Bilirubin Total
· Total Protein
· HDL Cholesterol
· HIV Antibody
Life insurance company underwriters also analyze the urine results for:
· White Blood Cells
· Red Blood Cells
· Granular Casts
· Hyaline Casts
· Specific Gravity
· Protein/Creatinine Ratio
· Diuretic Agents
· Beta Blockers
In addition to the analyzing the blood and urine the life insurance underwriters factor in:
· Height & Weight
· Blood Pressure Readings (typically three)
· Pulse Reading
· Body mass index (BMI)
It would be prudent to know your readings and make sure they are in line with the insurance company’s underwriting guidelines, this way you will have a better chance of qualifying for the best rating possible. It would be smart to do this before applying for life insurance and completing a paramedical exam because any adverse readings could be put on the medical information bureau (MIB) for seven years, which could damage a person’s chance of getting a preferred rate class in the future.
If you would like to speak with a life insurance expert who will get you the best rating for life insurance you should contact Pacific Insurance Group based out of Bellevue Washington because their team of agents have the knowledge to get you the best deal for your situation. With over a hundred years of life insurance experience you can rest assured you are in great hands. You can reach an agent at Pacific Insurance Group by calling 425-246-4222 or emailing email@example.com, who will either personally help you or put you in touch with an expert life insurance agent.
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