More on Life Insurance
More on Life Insurance
Published April 9, 2020
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Before you can buy a life insurance policy, you have to go through an application process to determine how much coverage you can get and what your premiums will look like. The application process consists of an initial phone interview, medical exam, and the final policy decision.
Because the life insurance application process usually takes about 4-6 weeks, you typically don’t need to worry about the expiration date on your interview and medical exam. But there may be circumstances where you need to postpone purchasing life insurance — if that’s the case, you have a certain amount of time during which your interview and medical exam will still be valid, after that you’ll need to start the life insurance application process again.
If you’re postponing your life insurance application due to the COVID-19 outbreak, you can still ensure you have some coverage with a temporary or no medical exam life insurance policy.
If more than six months pass after your phone interview and you haven’t completed your medical exam yet, you will likely need to reconnect with your life insurance agent to update them on any changes in your health and circumstance
The medical exam labs are valid for six months to a year, depending on the insurer
If you need to postpone purchasing a traditional life insurance policy, you can purchase temporary coverage or no medical exam life insurance in the interim
In some situations, you may decide, or be advised, to postpone your life insurance application. Usually, this is because of factors that could earn you a low health classification or disqualify you from life insurance altogether, such as pending travel to a dangerous location, a criminal conviction, or bankruptcy.
Due to the current coronavirus outbreak, some people are choosing to postpone their life insurance applications in accordance with social distancing mandates or are unable to take a medical exam because of current regulations in place to slow the outbreak’s spread.
Because the timeline of postponement is unclear at this time, it’s important to understand how delaying the application process can impact your life insurance eligibility and what options you have to get some coverage until you can resume the application process.
Getting a life insurance policy consists of three parts:
To get a traditional term life insurance policy, each step in this process is required. The application process helps the insurer determine your health classification — which determines how much you pay for premiums.
The phone interview is where you inform the underwriter about any upcoming travel plans or potentially dangerous hobbies you have, while the medical exam is how insurers get a better picture of your overall health. Non-traditional life insurance policies that don’t require a medical exam are more expensive than traditional term life policies because life insurance companies are taking on additional risk by insuring you without fully understanding your health background.
The first step in the life insurance application process is the phone interview with your life insurance agent. This is where they get a better understanding of your background, hobbies, and medical history to estimate what your life insurance quotes will look like.
While the phone interview can help your life insurance agent understand the best policy for your individual circumstances and determine what type of premiums you will likely see, it by no means that you’re locked into a specific health classification or life insurance premium rate. It’s the first step in the process and can give you a general idea of what premiums you would receive, but the medical exam is where the insurer is able to get more robust information about your health.
If you’re purchasing a traditional term life policy, the next step after the phone interview would be the medical exam. If, after the initial phone interview, you decide to postpone your life insurance medical exam, you can presumably resume the next steps in the application process within six months of the interview. There are no strict guidelines on this, however, and you’ll want to report any changes in your health or circumstance even if less than six months have passed.
If more than six months have passed, you’ll likely need to have another phone interview to re-establish details about your background for the life insurance agent.
The life insurance medical exam is similar to an annual physical — the medical examiner will evaluate your health and if you have any underlying conditions such as diabetes or high cholesterol. You’ll also provide blood work and a urine sample and, depending on your age, you may need to undergo an EKG.
The lab results from your medical exam are valid for six months to a year, depending on the insurer. If you decide to postpone purchasing your policy after your labs expire, you’ll need to re-take the medical exam and provide new labs in order to get life insurance.
If you’ve already taken your medical exam, your best bet for getting optimal rates is to sign your final policy papers before your exam results have expired. If your health improves later, you can always apply for reconsideration a year or two after your policy is in force. During the reconsideration process, you’ll re-take the medical exam to demonstrate any improvements in your health and potentially receive a better life insurance classification. If you go through the reconsideration process, you don’t need to worry about the converse happening — life insurance companies will not increase your premiums if your health has declined since your policy became active.
But if you take the medical exam and postpone purchasing your policy until after your labs have expired, there is a chance that a new application could provide a different result. If your health has worsened, you might be offered costlier premiums or may not be eligible for a policy at all.
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The cost of life insurance increases by about 8-10% every year that you age. And while the pricing disparity if you postpone purchasing a policy for just one year may not break the bank, any changes in your health or individual circumstance can. If you’re diagnosed with a medical condition or even change jobs between now and when you resume the life insurance application process, you might end up paying more for your coverage.
Additionally, waiting to get a policy runs the risk of a coverage gap. This is when your dependents would financially suffer if you died unexpectedly, but you don’t have any life insurance to protect them. Thankfully, there are non-traditional coverage options that you can pursue if you need to postpone coverage for the foreseeable future.
All life insurance policies will require some sort of initial phone call with a life insurance agent. That said, last resort policies like final expense insurance won’t dive as deep into your background to determine your life insurance eligibility.
While you can’t skirt around the phone interview to get coverage, you can ensure some death benefit payout for your loved ones even if you need to postpone taking the medical exam. If you’re postponing your medical exam due to the current coronavirus pandemic, there are still options you can take to ensure that you have some coverage now.
You may not be able to get a medical exam right now — but that doesn’t mean you shouldn’t get coverage at all. While life insurance policies that don’t require a medical exam tend to be costlier and often don’t provide the full amount of coverage you need, having some coverage to support your loved ones financially if you are no longer able to is better than having no coverage at all.
You have a few policy options when it comes to no medical exam life insurance:
|INSURANCE COMPANY||TERMS OFFERED||AGES OFFERED||COVERAGE AMOUNT AVAILABLE|
|Mutual of Omaha||Term Express 20, 30||18-50||$25,000-$300,000|
|Term Express 10, 15||18-50||$25,000-$300,000|
|Transamerica||Trendsetter LB Term 10, 15, 20, 25, 30||18-60||$25,000-$249,000|
|Trendsetter Super Term 10, 15, 20, 25, 30||18-60||$25,000-$99,999|
If you are unable to take the medical exam due to the coronavirus pandemic but know you’ll need more coverage than a no medical exam policy can offer later on, you can apply for a new policy once medical exams have resumed in your state or social distancing mandates have eased. An additional policy would supplement your current no medical exam policy’s coverage to sufficiently replace your income if you die prematurely.
Temporary life insurance is coverage that you can get while you await your actual policy decision. If you’ve already completed the medical exam, then you likely only need temporary coverage in the short term. Most of the top life insurance companies offer some sort of temporary coverage.
But if you’ve started your life insurance application and cannot take the medical exam at this point in time, then you may need to apply for a policy through one of the following insurers to get temporary coverage that doesn’t require a medical exam:
|LIFE INSURANCE COMPANY||TEMPORARY COVERAGE POLICY|
|Banner Life||Offers up to $1,000,000 in coverage but not available on life insurance applications over this amount|
|Lincoln Financial||Offers up to $500,000 in coverage but not available on life insurance applications greater than $3,000,000 or for applicants over the age of 70|
|Pacific Life||Offers up to $1,000,000 in coverage but not available in NY or KS|
Temporary coverage protects you and your loved ones from a coverage gap and ensures that your dependents are financially secure if you die, even if you cannot get a traditional policy right now.
Nupur Gambhir is a life insurance editor at Policygenius in New York City. She has researched and written extensively about life insurance since 2019, with specialties in life insurance companies, policy types, and end-of-life planning. Her writing on insurance and finance has appeared on MSN, The Financial Gym, and end-of-life planning service Cake. Previously, she worked in marketing and business development for travel and tech.
Nupur has a B.A. in Economics from Ohio State University.