Unlike other forms of insurance, which are often written using standard forms that can be used by multiple customers. Life insurance is uniquely customized to meet the precise needs of each applicant. As such, life insurance underwriters must consider a variety of factors. The needs of a potential insurance customer. The risks that the insurance provider must take on if it intends to cover said customer. Which is why applying for life insurance is different than other products.
How To Go About Applying For Life Insurance
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Life insurance underwriters are charged with the task of selecting, classifying, and rating the risks posed by a potential insured. The purpose is to select only those risks that the insurance provider can assume at a reasonable cost. Then maintain its ability to remain profitable. By identifying risks, insurers can maintain profitability by charging higher premiums. In exchange they accept the risk, or they can refuse to issue coverage entirely.
Underwriters have access to a multitude of information when classifying and rating risks. This information comes from such sources as an insured’s medical exams, statements issued by the insured’s primary physician and credit/investigative reports. Information personally supplied by a life insurance producer during the initial solicitation process (known as an “agent’s report,” which specifies any knowledge the producer has of the applicant’s financial status and character) is also considered.
Accurate completion of a life insurance application is critical to the underwriting process. Also establishing the final insurance policy that will be issued to an insured. This is true for several reasons. Don’t let all of these reasons scare you away from applying for life insurance for the first time or even the 5th time.
What’s Considered In Eligibility For Coverage
The first reason is that statements made in the application are used by underwriters to consider eligibility for coverage, as well as appropriate premium rates and coverage amounts. Secondly, and perhaps most importantly, life insurance contracts contain what is known as an entire contract clause. Meaning that the original application for coverage is combined with the final policy form to comprise the entire insurance contract.
The entire contract clause affects both the insurer and insured. Because the application is considered part of a final legal contract, the insured can be held legally accountable for the accuracy of statements contained within the application. Conversely, after a certain time period expires (usually 2-3 years, although this varies by state), the insurer cannot hold the insured responsible for any misstatements or inaccuracies contained within the application if it fails to identify them within the appropriate timeframe. As such, both producers and insureds must work together to ensure that the application for coverage is accurate and completed in full.
A life insurance application begins by obtaining general information about a potential insured, such as his legal name, place of residence, date of birth, occupation, marital status and Social Security number. In cases where an applicant wants to purchase life insurance intended to cover another person, this information must be provided for both the applicant and intended insured. Information pertinent to the coverage to be issued is also noted, such as the premium payment mode and policy beneficiaries.
What Is Required Legally
An application must also contain legally required signatures. These would include the applicant’s, the insured’s (if different from the applicant) and the producer’s signatures. If the insured is a minor, her legal guardian must sign the application as well.
Finally, a completed life insurance application is typically accompanied by the insured’s medical information statements issued by the insured’s physician. However, requirements for what and how this information is permitted to be revealed and obtained,varies by state.
Those who wish to know more about medical-related information in the application process should contact their local state insurance departments. Also if you need more information on applying for life insurance, click the button below.