Life insurance is one of the most important and effective risk management tools at your disposal. If you pass away, your spouse, children, business partners and others could face significant financial challenges. They may miss your income, or they could struggle with debt. Life insurance provides a tax-free lump-sum payment upon your death to help your loved ones overcome their obstacles and reach their goals.
A broad range of life insurance policies are available, each with its own benefits and costs. There are a number of factors that can affect the cost of your policy, such as the amount of coverage and the type of policy. Your age is also an important factor. Generally, the older you are when you buy life insurance, the higher your premium will be.
Health is another important factor in calculating your premium. Life insurance companies assign health ratings and classifications when estimating a premium amount. For example, the healthiest applicants may get “preferred” ratings while others may get “standard” or below. Everything else being equal, the better your rating, the lower your premium.
Obviously, you can’t change your overall health overnight. However, if you know a life insurance purchase is in your future, you can take steps today to improve your health and your rating. Even a few simple actions can turn into big savings. Below are a few tips to navigate the underwriting process and get your best possible rating:
Cut back on unhealthy habits.
There are some health issues you can’t control or change in a short period of time. For example, you can’t change past health problems or eliminate a chronic illness. You can’t change your genetics or family history.
However, there are some aspects of your health you may be able to change, even in a matter of weeks or months. For example, you could use this time to improve your diet and exercise routine. If you drink regularly, consider cutting back in the lead-up to the life insurance exam.
Smoking is one habit that has a major impact on your rating and your premiums. Most insurers keep separate premium tables for smokers and nonsmokers, with the smokers’ table having higher rates. If you have enough time in advance, consider quitting smoking. It could save you a significant amount of money.
Prepare for the exam.
The underwriting process is different for everyone. If you are older or have a history of health issues, you may need a physical or a series of tests before you get approved. However, almost everyone has to go through a basic health exam with a nurse. These exams are usually conducted at your home or office and include measurements of height and weight, blood and urine samples, as well as a blood pressure test.
The blood pressure reading plays an important role in your health classification. As you might expect, life insurers take heart issues seriously. Fortunately, you can take steps in the lead-up to the exam to maintain normal blood pressure. For example, you can get a good night’s sleep before the exam. Try to eliminate any stressful issues so you’re not anxious during the test. Consider some light exercise the evening before your exam. Also, think about skipping your morning coffee so you don’t artificially raise your blood pressure.
Be honest with the underwriter.
Since a better health rating can mean big savings, you may be tempted to conceal information about your health. People often try to hide the fact that they are smokers or that they participate in risky activities such as scuba diving. Some even omit certain diagnoses they’ve received or certain prescriptions.
It’s always the best practice to be honest with an underwriter. If you pass away and the life insurance company feels that you were deceptive in your application, it could withhold the death benefit. If it uncovers deception during underwriting, it may decline your application altogether. Keep in mind that the insurance company can access nearly all of your medical information, so there’s usually no benefit to withholding important details.
Ready to protect your family? Let’s talk about your life insurance strategy. Contact us today at Spicer Wealth. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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