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  • What should I expect when buying life insurance?
  • July 30, 2013
  • Tony Steuer

    By Tony Steuer, CLU, LA

    Life insurance can help ensure the financial stability and security for your dependents (i.e., beneficiaries), so they have the resources to replace your income after you die.

    But, how does one go about purchasing life insurance?

    Being able to understand the process of purchasing life insurance can guarantee that you are getting the right policy, which fits your needs and budget.

    The first step is to determine your policy and coverage, which is categorized into two groups – permanent life insurance (i.e., coverage for your entire life) and term life insurance (i.e., coverage for a set period of time).

    From here, you will need to determine the amount of coverage you want – how much you want to leave your beneficiaries behind.

    Seeking out help from an insurance adviser can make the process of buying life insurance much easier.

    After having a basic understanding of your insurance needs, the next step is the written application. This is necessary whether you apply through an advisor or directly to the company.

    In recent years, two new methods have been created to reduce the processing time of applying for life insurance, which can take several weeks under the traditional method.

    The first method is called tele underwriting, which is where you are asked all the questions over phone and then sign the application at a later time.

    The second method is similar; with this method the application is done over the Internet, additional questions are asked over the phone, and then the paperwork (including the application) are signed when the policy is delivered.

    An application is a form with a series of questions that will range from your identification information (i.e., address, phone number, drivers license, etc.), to personal financial information, as well as medical questions and avocation questionnaires (where appropriate). Avocations are hobbies, such as rock climbing, scuba driving, etc.

    Some insurance companies and policies will accept your medical information via application, while others require a health exam.

    In the case where medical exam is required, a paramedical (i.e., licensed healthcare professional) will conduct a physical either at your home, work or at a licensed clinic.

    Next, an underwriter at an insurance company will evaluate your application and medical history/exam to determine your financial risk to the company. From here, they will either approve or deny you for life insurance, which can take days or weeks to determine.

About Tony Steuer

Noted insurance author Tony Steuer has spent over 25 years in the life insurance industry. Steuer’s leadership roles include serving on the California Department of Insurance Curriculum board and the National Financial Educator's Council Curriculum Advisory Panel as well as having served as President of the San Francisco Chapter of the American Society of CLU & ChFC, President of the leading Life Insurance Producers of Northern California, and as a board member of the San Francisco Life Underwriters Association. Mr. Steuer is the author of Questions and Answers on Life Insurance: The Life Insurance Toolbook, The Questions and Answers on Life Insurance Workbook and The Questions and Answers on Disability Insurance Workbook - the first two were awarded the “Excellence in Financial Literacy (EIFLE) Award from the Institute of Financial Literacy. Steuer holds a Chartered Life Underwriter (CLU) designation and also holds the Life and Disability Insurance Analyst License, a designation that is held by less than thirty people in California.

Creative Commons License
Questions & Answers on Life Insurance by Tony Steuer, CLU, LA, CPFFE is licensed under a Creative Commons Attribution 3.0 Unported License.

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