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The life insurance application process can be relatively straightforward. Ordinarily, you have two options: either to take out a direct policy or get covered through a financial adviser. Both will ask you questions about your health, lifestyle and occupation which will determine how much you pay for a policy.
Life insurance application: direct vs advised options
Directly from the insurer
If you apply directly, the life insurance application process is typically done online by you, without an adviser. The questionnaire itself is usually straightforward and requires a few details about your personal circumstances – for instance, your medical history, employment and age. You'll also need to decide how much life insurance you need and agree to certain exclusions and premium loadings.
With an adviser
If you apply with an adviser, the life insurance application tends to be a lengthier and more thorough process, though the adviser will do most of the work. They can work out how much and what type of cover you'll need based on your personal circumstances, clarify anything you're unsure about and talk you through what you are and are not covered for.
What kind of information will I have to provide?
During the application process you'll usually be asked to disclose the following information:
- Height and weight
- Date of birth
- Lifestyle habits (smoking habits, if you drink or take recreational drugs)
- Your own medical history (medications you are taking, any pre-existing conditions)
- Your family's medical history
- Information about your occupation and hobbies
What are the typical stages involved in a life insurance application?
Submit a policy application
Start the application process by completing the paperwork with your chosen life insurance provider. You need to answer all the questions truthfully (as best you can) and you will need to sign a declaration that the information you have provided is accurate. By deliberately providing incorrect or misleading information, you risk voiding your insurance policy and leaving your family with nothing when they claim.
Some insurance companies will require you to have an actual physical examination before you're approved; others will just need you to answer questions about your medical history on your application form. If you're having difficulty remembering something about your medical history, contact your doctor for medical records.
Your overall risk is assessed
The life insurance provider will work with an underwriting team to assess your eligibility based on your application. They'll consider your medical history, lifestyle activities, sports you engage in and occupation to work out out the premium you should pay. All of the information in your insurance application will be kept confidential.
What happens after I've been assessed?
Once your application and details have been assessed:
- The life insurance company will notify you in writing of their findings. Usually the company will accept your application and send you a policy schedule with details of the cover and policy you have applied for, as well as the premiums, which have been finalised for you. Your provider will keep your details on file until the time you or your family make a claim.
- If a life insurance provider cannot accept your application they will instead offer you amended terms of insurance so that you can still obtain some form of cover. For example, if you have a serious pre-existing medical condition, or you regularly take part in high-risk activities, then your insurer will do one of two things with your application:
- Apply a loading: This means that you'll have to pay a little extra but you'll still be covered.
- Place exclusions on your policy: For example, if you have a history of blood disease, you won’t be able to claim for any instances related to this condition, or if you regularly participate in high-risk sports such as sky diving, then you won’t be able to claim for any illnesses or injuries resulting from sky diving.
How much cover do I need?
There are a few different ways to determine how much cover you need to take out, including using our online calculator. Another common method is to take your annual salary and multiply it by 10 (so if you make $50,000 a year, take out cover for $500,000).
You might also want to consider the immediate expenses that will need to be covered after your death – such as your funeral, mortgage repayments that still need to be made, other loans or debts that you still need to pay off, school fees and education costs for your children and a retirement fund for your partner. If you total these costs together, you will have a rough idea of how much cover you need.
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