You got a quote for life insurance. You applied for life insurance, answering tons of questions about your health and lifestyle. You took a medical exam. Your doctor even sent the life insurance company some files.
The good news: your life insurance application has been approved. The bad news: your rate is higher than what you were quoted.
If this happened to you, don’t worry. It's actually a common outcome because the underwriting process is incredibly thorough and will often uncover things that you weren't even aware of (like high cholesterol or elevated liver enzymes). Here are three things you can do if the life insurer offers you a higher rate than what you were initially quoted:
1. First things first, you’re going to want to understand why your life insurer raised the premium. Most often, life insurance companies find something in the medical exam that you may not have been aware of that they believe makes you a riskier candidate. Your agent or broker can help you decode your insurer’s decision-making process.
Want to read more about how life insurance companies decide rates?
2. After figuring out why your premium has increased, sit down with your agent or broker and analyze your options. In many cases, different life insurance companies will have more favorable policies towards specific medical conditions. It might be advisable to submit an application to a new insurance company with more favorable views of whatever condition triggered the rate change. The good news is that you won't have to take a new medical exam; life insurance medical exams are good for 6 months.
More about how life insurance companies see common medical conditions:
3. In the meantime, accept the policy offered by the insurance company you applied with. Even if you're applying to a new insurance company, on the advice of your agent, you'll want to lock in coverage just in case. You can always surrender the policy if you find a better rate at an alternative insurance company, and it’s better to lock-in coverage in case something happens while you’re searching. In most cases, the rate you get from the first insurance company is still the best you’ll get.
Image: Allison McDonald