Table of Contents
1. The Life Insurance Application Questionnaire
The process to buy any life insurance policy starts with the application. Completing an application can take anywhere from 10 to 60 minutes.
- Traditional policies that include a medical exam, as well as policies with accelerated underwriting, have applications that take 45 to 60 minutes to complete.
- Simplified and instant underwriting applications take 15 to 30 minutes to complete.
You can expect to find questions from the following categories on the application.
Basic personal information
This includes personal and identifying information such as:
- Tobacco use
- Social Security number
- Marital status
- HIPAA authorization
The HIPAA authorization allows the insurance company to collect your personal data and request public record reports on you. Your personal information is required on all life insurance applications.
There are too many health questions on a life insurance application to list them all here. Virtually all applications start with what are called health-related “knock-out” questions.
The insurance company will want to know right away if you:
- Require daily medical assistance
- Have diagnostic tests scheduled or are waiting on test results
- Recently had or currently have cancer or certain immune diseases, or if you’ve recently had a heart attack
- Take any of the medications on their automatic decline list
The company asks these disqualification questions before spending the money to pull your public reports. If you answer yes to any of them, the application process ends at this point.
After the knock-out questions, you will be asked more specific medical questions. It’s best to be completely honest when answering these medical questions because they will be cross-referenced with your public reports.
Insurance companies consider your financial history when assessing how long you’re likely to live — which helps them determine how risky it is to offer you a policy. Blemishes on your financial history won’t disqualify you from obtaining life insurance, but they could increase the cost of your policy.
When evaluating your financial history, the insurance company will look at:
- Payment history
- Residential history
- Tax liens
- Short sales
The insurance application will ask about your financial history, and the insurance company will then cross-reference the information you provide against the information contained in your public reports. It is best not to omit any information because non-disclosure of your financial history is also used to determine your risk level.
Most life insurance applications include lifestyle questions. Usually, if you answer yes to a lifestyle question, you will be presented with follow-up questions to get more information.
Unfortunately, instant underwriting companies typically do not ask follow-up questions because a human underwriter would need to be involved. These companies rely on algorithms to make immediate decisions on applications. So, instead of asking you additional follow-up questions, oftentimes an instant underwriting company will simply decline your application if you answer yes to one or more of the initial lifestyle questions.
These questions will ask you about:
- High-risk jobs and hobbies
- Foreign travel
- Illegal drug use
- Criminal history
Lifestyle risks can result in higher costs or exclusions in your policy. For instance, your policy may not pay out the death benefit if you die while scuba diving or driving a race car. For lifestyle risks, it’s best to avoid applying for an instant underwriting policy.
Life insurance companies consider your employment status and history important for a few reasons. Most believe that your employment status and the type of job you have affect your life expectancy. They may ask for up to 10 years of employment history, including:
- Your occupation
- Your salary
- Your employment status (i.e., full-time, part-time, unemployed, student, retired)
- Whether you served/are serving in the military
Your employment history won’t disqualify you for life insurance unless you are collecting social benefits or disability. Military status is less clear-cut. How it will affect your rates depends on the insurance company.
Your employment information also affects how much life insurance coverage you will qualify for, because death benefit amounts are based on a multiple of your income.
The last part of the application will ask about how you are going to pay for your policy. Providing payment information may feel like you’re making a commitment, or placing yourself at risk for identity theft. The life insurance company needs to know if you have a bank account because payments via credit or debit card may not be an option. Know that the insurance company will not withdraw funds without your permission, and banking account information is relatively low-risk in terms of identity theft.
One way around providing payment information is to say that you plan on paying annually with a check. You can update this decision later, after you are approved.
The application may include payment questions about:
- Your bank account information
- If you want to be charged upon an approval
- Payments by bank draft or check
- Whether you prefer to make monthly, quarterly, semi-annual, or annual payments
Bank drafts or checks are often the only way to pay for a life insurance policy. Paying monthly with a physical check is not permitted because of the administrative costs. A monthly ACH bank draft or an annual check are the preferred methods of payment.
Be aware that you are not locked into paying for a life insurance policy for the duration of the policy. You can cancel the policy at any time and get a prorated refund. Or, you can simply stop paying.
2. Public Reports
In addition to the information collected on the application, the life insurance company will pull several of your public reports. The reports are pulled with your HIPAA authorization.
It is important for you to be aware that these reports are used because you do not want to be caught omitting information on a life insurance application.
Life insurance companies are in business to make money. If they find a blatant omission on someone’s application, it raises the question of what else the person might be hiding. Omissions are a red flag to insurance companies and can result in increased costs for coverage or an application being declined.
Be honest on your application. The insurance company can and will access the information in your public reports.
The following reports are run either while you’re completing the application or immediately afterward.
Every prescription that has been written for you is stored in databases available to insurance companies. Even if you have not filled a prescription that was written for you, it’s still part of your record.
Multiple data sources are used to piece together your full history:
- Your state’s prescription drug monitoring program (PDMP)
Most states have implemented a PDMP to monitor controlled substances, such as opioid medications. As a result, your prescription history is stored and accessible to doctors and insurance companies.
- Your health insurance company
When you apply for health insurance, the agreement you sign gives the health insurance authorization to share your medical information with third parties for the purpose of reviewing claims. Life insurance companies request this data either directly or through a third party.
- Pharmacy benefit managers (PBMs)
PBMs serve as a middleman between pharmacies and health insurance companies. They are responsible for validating consumer eligibility, administering plan benefits, and negotiating costs. They were created to reduce costs by handling the processing and payment of claims.
- Savings programs
Businesses that offer discounts on prescription medications often derive part of their revenue by selling their customers’ data. That doesn’t mean you shouldn’t use this type of program — some can save you a substantial amount. Just be aware that when you register for a savings program, your data is probably going to be shared.
Primary care physician or general practitioner reports
To coordinate your care, it’s important that the doctors you see make your medical history available to certain other parties. You may have noticed that whenever you see a specialist or have a diagnostic test done, you’re asked who your primary care physician is.
Insurance companies often can access at least some of this information through a clearinghouse called MIB Group, or simply MIB (originally known as The Medical Insurance Bureau). The information is coded to protect patients’ privacy, so there’s a level of encryption. Personal identifiers are not used, so there’s no risk of identity theft. Any life insurance company that joins the MIB has access to data the clearinghouse stores.
When a doctor sends you to a facility such as Quest Diagnostics for blood work or imaging, electronic files are created and shared. The results, of course, are shared with the medical professional who ordered the tests. If the diagnostics facility files a claim to have your health insurance pay for the testing, there’s also an electronic file of the claim.
While life insurance companies can’t see the actual test results, they can see the existence of the physician’s order for the testing and the health insurance claim. If an insurance company discovers adverse lab results during the underwriting process, the company is obligated to report the information to the MIB.
Doctor visit history
When you fill out paperwork or intake forms at a doctor’s office, they ask you to sign a HIPAA authorization form that allows them to share your data with certain third parties. This can include data from your insurance claim forms, pharmacy reports, and primary care physician reports. The intent is to help coordinate patient care and facilitate the payment process.
Department of Motor Vehicles (DMV) report
Life insurance applications will ask for your driver’s license number, which is used to pull a report from the Motor Vehicles Department. Insurance companies use your DMV report to verify your identity and to check for a possible history of violations, including DUIs/DWIs.
Insurance claims history
Insurance companies who are members of the MIB have access to your insurance claim history. When you file a health insurance claim, the data is stored in the MIB. The data is encoded to protect your privacy, but life insurance companies can get enough information to potentially influence their decision regarding your eligibility.
Insurance application history
When you apply for life insurance with one insurance company, other insurance companies will know about it. Your application history is used to identify fraudulent activity. If you apply with multiple insurance companies at the same time, it’s a red flag that may cause your applications to be declined.
Past insurance application decisions
The MIB stores data for the vast majority of applications for life, health, disability, long-term care, Medicare, and critical illness insurance. Life insurance applications ask whether you have ever been rated or declined on a life insurance application. Your responses are used to assess your risk and life expectancy. Anytime you apply for insurance, be aware that your information is available to all MIB member companies.
This information is obtained through a simple background check. Your criminal history is public, so life insurance companies can easily see any misdemeanors, felonies, and arrests in your past. How insurance companies use this data varies. A felony in the last 10 years will result in a decline. A DUI 10 years ago normally will not disqualify you for life insurance. But omitting information on your application is a red flag. It could cause the insurance company’s algorithm to increase your rate or issue a decline.
Auto insurance companies and banks are able to pull your credit scores directly, but life insurance companies cannot. This does not mean, however, that you are in the clear if you have bad credit.
Insurance companies are able to access an applicant’s “risk score” through a third-party service called LexisNexis. This is a soft pull, so it doesn’t affect your credit score. Insurance companies can tell whether a low credit score resulted in a higher risk score. While an insurer might not decline your application in this scenario, you may end up paying more for your policy. In general, it’s not uncommon for a credit score of less than 600 to increase premium costs.
Your financial history will directly affect your life insurance rates. This information is easily accessible through a background check and includes:
- Tax liens
- Short sales
- Residential history
A bankruptcy 10 years ago won’t affect your rates, though a bankruptcy in the past 5 years can increase the cost of your policy. Remember that omitting this information is also an indicator used to evaluate risk, so be honest.
No Medical Exam Life Insurance Next Steps
For instant underwriting products, the process stops here. You are done.
If you are applying for an instant issue life insurance policy, a decision is provided as soon as you complete the application. At this point, there are no additional steps in the application process.
Accelerated and simplified underwriting often stops here but may continue to:
- Follow-up questions from an underwriter
- A phone interview
- Medical records requests
Questions from an underwriter are not uncommon for accelerated underwriting and simplified issue life insurance. Questions are often asked via email or through your agent.
The underwriter may request a copy of your driver’s license to confirm your identity. You may be asked to clarify an answer to a medical history question, such as why you take a certain medication. The underwriter may ask about why you saw a specialist, the treatment plan for an illness, or your current status regarding a diagnosed medical condition.
You may also be asked to schedule a phone interview with a representative from the insurance company. The information you provide during the interview is then transcribed and given to the underwriter. This type of phone interview is not conducted by a licensed insurance agent.
When an underwriter wants further details about your medical history, it is not uncommon for doctors’ records to be requested. A form called an Attending Physician Statement, or APS, is sent to your doctor, and all of the doctor’s notes are then forwarded to the underwriter.
If you are applying for a no medical exam life insurance policy, the application process ends here.
3. The Medical Examination
In the traditional underwriting process, the next step is the medical exam. After the application questionnaire and preliminary questions from the underwriter, you are required to set up a time for a paramedical examination. Typically, the exam is conducted at your home, your business, or at the company’s location. It’s important you prepare for the medical exam.
Paramedical exams include:
- A blood draw
- Urine collection
- Blood pressure check
- Pulse readings
- Height and weight measurements
- A medical history interview
- Possibly an EKG
- Possibly a saliva test
If you are reading this, you’re most likely thinking about applying for a life insurance policy. Just do it. If you’ve ever bought life insurance, then you know that it’s comforting to know your loved ones are protected.
We’ve been selling life insurance since 2004 and have seen more death claims than you can imagine. Life insurance is more than just a contract. It’s mortgage payments, food on the table, warm clothing, college tuition, and an expression of love. Life insurance is one of the most wonderful things you will ever purchase.
Below are some tips to help you when applying:
- Apply to only one company at a time
It may be tempting to apply to several insurance companies at the same time to see where you can get the best price. Don’t do it. One of the questions on the application is whether you have applications with other insurance companies. A life insurance company spends money to run your public reports, pay underwriters, and coordinate with medical examiners.
Wait until you get a decision before you apply to another company. After you get approved by one company, you can reuse your medical exam at another insurance company.
- Say no to replacements
Replacement is a dirty word to life insurance companies. The application will ask whether you have existing policies and if you plan on replacing them with this new policy. Many no medical exam companies don’t allow replacements and will decline your application.
It’s better to say no to the replacement question. Wait until you are approved for the new policy and then cancel your old policy. Here’s why: Replacements the insurance company (the one you’re applying to) to cancel your existing policy. There are significant administrative costs and liability risks when the life insurance company terminates another policy on your behalf.
If you decide to replace or cancel a life insurance policy, it’s best to do it yourself — after you have a new one in place.
- Make sure your application is secure
You’ll be asked to provide personal identification information, such as your Social Security number and banking information, on the application. Make sure the application method is secure.
If you’re applying online, make sure the page is using secure web pages. There should be a closed lock in the URL bar, and the web address should start with HTTPS. Don’t use unsecured public Wi-Fi when filling out and submitting your application.
If you’re completing your application over the phone with an agent, make sure that the agent is using the company’s phone number, and that he or she is licensed.
- Be ready to list all of your prescription medications
You will be asked to provide the name of all of your prescription medications, as well as the dosage and how often you take them. This information is then cross-referenced with your pharmacy report. It’s an opportunity to show the insurance company that you are providing full disclosure on the application. Don’t omit medications. The insurance company would consider that a red flag, and it could increase the cost of your policy or cause a decline.
- Be ready to provide your doctor’s name
The application will ask for your doctor’s name, address, and phone number, when your last visit was, and the nature of the visit.
At the very least, provide your doctor’s name and the year of your last visit. Your doctor’s name is probably printed on the label of your medications container. As long as you provide the name, the insurance company can find his or her contact information. It looks good when you provide a thorough medication history.
- If you’re unsure, ask for help
It’s free to use a life insurance agent. Agents are paid by the insurance company, and the cost of the policy is the same whether you use an agent or not.
An agent can help you avoid choosing the wrong insurance company or policy and can assist you with the application.
If you need help deciding what policy is best for you and don't want to do the research on your own, an independent agency can help. Policygenius has licensed agents in all 50 states and represents multiple companies.
If you prefer a more hands-on approach, we at Insurist specialize in high-risk life policies with premiums over $2,500 annually. We represent both the large and niche insurance companies and contact underwriters directly to find you the best deal. Contact an Insurist independent life insurance agent.