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What You Need to Apply for Term Life Insurance

March 19, 2015
Insurance, Life Insurance
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If you’ve been shopping for term life insurance and have chosen your policy amount, term length and company, you’re ready for the application.

To help the process go smoothly, here’s what you’ll want to have handy.

Your beneficiaries

When you’re buying life insurance you’ll designate your beneficiaries on your application, so give some thought to who should receive the death benefit. You can assign percentages of the benefit to each beneficiary (such as 70% for your spouse and 30% for your brother).

You should also be prepared to designate a secondary beneficiary. This is the person who receives the benefit if the primary beneficiary is already deceased at the time of your death.

Be sure you have the Social Security numbers and dates of birth of your beneficiaries.

Your payment frequency

The application will likely ask how often you want to be billed. Common choices are single payment (meaning one large lump sum), annually, semi-annually, quarterly and monthly.

Other life insurance

The life insurance company will want to know if you have other life insurance applications pending, and for how much insurance. If you seem to be applying for more life insurance than your situation calls for, the company will likely ask why.

The application will also ask how much individual life insurance you already have in place.

» MORE: Life insurance definition

Non-health questions

The life insurance company will typically ask if you have any criminal convictions or a history of a suspended driver’s license, moving violations or DUI. If you do, know the dates — insurers are generally only interested in such events for a certain time period, such as the last five years.

Your future plans for risky activities

Piloting a plane, rock climbing, ice climbing, hang gliding, scuba diving, skydiving and car racing can all increase your chance of death, so the life insurance application will ask if you have participated or intend to participate in those. Risky hobbies will boost your life insurance premiums, or may even result in a denial.

The application will ask if you intend to travel outside the United States in the next year. A trip to Canada won’t affect your application, but a trip to Syria might. The U.S. State Department’s list of travel alerts will give you an idea which countries are considered risky.

Your family’s health history

Since certain diseases among family members can impact your own life expectancy, the life insurance company will want to know whether parents or siblings have been diagnosed or treated for heart or kidney disease, stroke, diabetes, cancer or other conditions.

If they have, know their age at the onset of the condition and, if they are deceased, their age at the time of death.

Your medical history

Tired yet? Pour another coffee because the life insurance application gets into the nitty-gritty of your health.

Although you provided information about your health to get a quote, you’ll need to provide it again for the application. There’s no point in fudging here because your insurer will use your medical records and information from a company called MIB Group to verify everything.

MIB Group maintains a database of health conditions reported on applications made within the past seven years for individual life, health, long-term care and other insurance types. So, say you previously applied for a life insurance policy and stated that you had been treated for cancer. If your new life insurance application doesn’t mention the cancer treatment, this will raise a red flag from MIB and your life insurer will likely want to investigate further.

Not every insurer feeds data to MIB. You can get your own MIB file to check its accuracy.

Have the name, address and phone number of your primary physician and the physician you last saw, along with the date of your last visit.

Be prepared to report the date, symptoms, diagnosis and treatment for a wide variety of medical conditions. The list will be very long and includes:

  • High blood pressure
  • High cholesterol
  • Chest pain
  • Ulcer
  • Anemia
  • Immune deficiency
  • Leukemia
  • Cancer, tumor and melanoma
  • Diabetes
  • Asthma
  • Brain disorders (even chronic headaches)
  • Depression, anxiety and suicidal thoughts
  • Anorexia or bulimia
  • Obsessive compulsive disorder
  • Problems with eyes, ears nose or throat

Current medications, drugs and drinking

The life insurance application will ask about past use of illegal drugs, current alcohol consumption and current prescription medications, and whether you’ve ever been advised to seek addiction treatment.

Sign your name

Why does signing your name deserve special attention? Because the life insurance application is a legal document. It can be used against you if you have intentionally misreported anything, which the insurer would consider fraud.

The insurance company is going to verify everything to the extent possible, which could include pulling your:

  • Medical records
  • Prescription drug record
  • DMV report
  • MIB report
  • Credit history (to look for bankruptcy)

After the application

After your application is in, you’ll be contacted by a paramedical examiner to schedule a life insurance medical exam (if your policy application requires one, and most do). You’ll arrange for a convenient time and place for the exam; for example, at home in the morning.

The exam generally includes height, weight, urine and blood samples and — yes — a review of all those medical questions again. You’ll be an expert on your own medical history when this is over.

So how long until your life insurance policy is issued? It will depend on how quickly the insurer can get your medical records and verify your application information. If the insurer has any follow-up questions, that will extend the process. According to life insurer SBLI, the entire process can take two weeks to three months, but one month is average.

» COMPARE: NerdWallet’s life insurance comparison tool

Amy Danise is a former editor and insurance authority at NerdWallet.

Image via iStock.