An insight into underwriting requirements for life insurance cover

Posted by David in Uncategorised | 0 comments

If you are considering making an application for the acquisition of life insurance cover for your dependents, then in most cases you will be required to fill in and send off a proposal form, which requests that you disclose plethora of personal information  about yourself.

Ensuring that you fill in these details accurately and truthfully is imperative to preventing your cover collapsing later on down the line and your dependents not getting paid out for the premiums you have paid for. This is because the personal data you convey to insurance companies is utilised in order to determine whether to grant you cover, how much to allow you to cover yourself for, and how much to charge you on your premiums, and any withheld or false information you provide which is discovered later down the line will likely result in the termination of your arrangement with a provider.

The type of personal data that you will be expected to elaborate on to your insurer is your place of residence, your contact information, the life insurance type you wish to cover yourself for, your job, your hobbies, the amount of money you want to be covered for, your personal reasons behind pursuing life insurance and medical information with supporting documents which discuss your family’s and your own medical history.

Let us evaluate these different personal pieces of information, determine why they are being requested of you, and how your answers to the questions could affect the life insurance policy you are offered.

Your Age – Outside of differences in past and existing medical conditions, your premiums will almost always be higher the older you get because logically speaking, you are at more risk of dying. There are specific types of cover which are offered by providers for people over 50, so if you fall into this category, then you should enquire about the availability of this when you are looking around for the right insurance for you.

Your intended insurance type – The type of cover you take out will directly influence the amount you pay on your premiums each month, and you should carefully consider why you are seeking acquisition of cover in the first place, before making a final decision in this area. You will first need to decide whether you want whole-of-life insurance or term-insurance, with the former a far more expensive option, though beneficial for those who wish to set up a trust frund for their dependents. You will also need to decide whether you want to pay less each year and cover yourself for less, with a decreasing term deal, or keep the amount you pay and are covered for the same throughout your life insurance term. Usually, a decreasing-term deal is the most cost effective way of covering your mortgage expenses, as the amount you pay each year is reduced in accordance with the amount you have paid off on your mortgage.

Your job – Certain jobs will come with a higher level of danger and risk than other forms of employment. For example, an explorer, miner or even pilot would be at far greater risk of dying each day than someone who works an office job, and as such would be regarded as higher risk by an insurance company. Essentially, the more danger your job poses to your general wellbeing, the higher your insurance premiums will be. If you change your occupation whilst using a premium, you should let your insurer know immediately, as it could impact the cost of your premiums each month.

Your hobbies – If you involve yourself with dangerous hobbies on a regular basis, then your premiums will be higher because once again, you will be regarded as higher risk by an insurance company.Dangerous activities could include things such as rock climbing or sky diving, or more conventional things such as rugby, cricket or football.

The amount you are covered for – Obviously, the more you desire to cover yourself for, the greater the amount each month that you will have to pay on your insurance. However, you could decide to use a decreasing-term deal which reduces the amount you pay every year and lowers the amount you are covered for in accordance with this.

Personal and family medical history – If you have any existing or reoccurring medical conditions in either your own or family history, then you will have to disclose this in full on your proposal form. A failure to do this will put your dependents at risk of not being paid out if you die from an ailment you or your family had suffered from before and omitted reference of it in your past on your form. You will also have to disclose details about your weight, and your drinking and alcohol status. If you are a smoker, drink alcohol frequently, or are overweight, your premiums will be a lot higher because you are at greater risk of dying. You will also be more prone to succumbing to illnesses related to these vices. If you stop smoking for a year, you can obtain non-smoker status and enjoy a reduction in the size of your monthly premiums, though you will still have your previous smoking status recorded.

Your insurance term – The length you cover yourself for will directly influence the amount you pay each month, because the longer your term, the more risk you are at of dying during the latter stages of that term. So for example, if you covered yourself for 25 years, you would be far more likely to die in the years 15-25 of that term, meaning that all your premiums will have to be larger than if you had insured yourself for just ten years. As such, you should evaluate how long your dependents actually need to be covered for before making any commitment to a final policy.

Medical history – how healthy you are can play a significant part in your proposal for life cover. For instance, if you are overweight you may have to pay more for the life cover or you may even be declined if you are very overweight. If you smoke you will pay more. If you have had a serious illness like cancer or a heart attack they can affect the premium you pay or even on your ability to get life cover.

 

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