Life insurance, in fact all insurance, is based on the idea of
sharing the possibility of some adverse/negative occurrence. A
large group of individuals, each year, pay their small part of
the total of the insurance claims so that when they die, their
spouses and children (called beneficiaries) can get a large
amount in relation to what they paid into their policy.
The life insurance companies are cautious and rightly so for the
good of all policyholders and try not to insure (or they charge
higher rates for) people who statistically, because of past
medical history or riskier life style, may die ahead of time. If
the insurance companies accepted these individuals who are at
"higher risk" at low rates, then this could, at some point,
increase the premium rates for next group of people who are in
good health. The reason for this is that if claims (money paid
out) exceeded money received in premiums, the life insurance
company could be paying out more than they collect.
Too little money received while paying more in insurance claims
could hurt the insurance company and it might even go out of
business and not be there to assist the beneficiaries of the
people who have life insurance with them. The life insurance
company has to be sensible and far-sighted resulting in a strong
financial position to serve all the policyowners.
Underwriting: By testing and studying the histories of the
people who apply for insurance, the cost to the insurance
consumer are kept down. This procedure of reviewing what rate is
charged to an individual is called underwriting.
Underwriting life insurance is not a precise science: Each life
insurance company looks at circumstances in a somewhat different
way. That's where an experienced and knowledgeable advocate for
your insurance comes into play - a high-quality agent - an agent
that has worked with the different life insurance companies and
can direct the insurance policy to the company that fits each
person's circumstances and history - and has the best rate.
That's where a company like http://www.lifeinsure.com comes in.
What are the underwriting concerns of the life insurance
companies? ?They are looking at the kind of health concerns that
one's doctor is looking for: Cigarette smoking, cholesterol
above normal limits, the ratio of good cholesterol to bad
cholesterol, one's weight and any medical history or dangerous
recreational sport that could decrease a person's life span.
Synopsis of how life insurance prices are calculated: One's age
Health history Gender; A female is charged less for life
insurance than a male of the same age based on the fact that
females live longer. The medical history of one's parents,
brothers and sisters Lifestyle: Do you drive race cars? Do you
go to hot spots in the world? Do mountain climbing? Parachute
jump?
What steps does the insurance company use to place you in a
rating category? ?An extensive questionnaire is completed,
sometimes by the agent for smaller amounts of insurance but
usually by a medical examiner. When a physical exam is required,
the insurance company pays for it along with blood and urine
testing and sometimes an EKG. You give your ok to let the
company access your medical records. Based on the test results
and your history, the company gives you a rating class. These
rating classes are called, for example; "super preferred" - the
lowest in cost - and then preferred, regular or standard. Each
of these groups has a different cost for your age and gender.
Even if you have had some medical concerns in your history, you
can often still get insurance but with an extra rate. The
terminology for this extra rate is called a "rated" policy.
What if you have had an imperfect medical history? ?Again, the
right person representing your interests is important. There are
agents that know more than others. Even with experience, it's
also important to have access to many insurance companies. A
good online insurance site has access to numerous companies.
When you get a medical exam for insurance, what is done??The
exam is done at your home or office. A physician, paramed or a
nurse goes through a questionnaire on your history. A urine
sample is taken along with a blood sample. For larger amounts,
more extensive tests including an EKG or X-ray, might be done.
The samples are tested for nicotine, certain medications and for
illegal drugs.
How do you lower the cost of your life insurance??First, shop
well. Get quotes from numerous companies. You can go to a
quoting engine, such as http://www.lifeinsure.com and get
anonymous and instant life insurance quotes online.
What are some things you can if you have a medical history and
want to see what life insurance would cost? ?Be complete and
truthful to the insurance agent about your history when you talk
with the representative. As experienced professionals, we are
aware of which insurance companies have lower insurance rates
for different conditions. Often, we can find a company that
looks at a situation vastly different than others to your
advantage.
If I get charged extra for my life insurance because of health
problems or if quit smoking cigarettes can I lower my life
insurance cost later? ?In years to come, if your health improves
(or if you are a smoker and quit for a few years), we can
contact the insurance company on your behalf and ask the life
insurance company will lower your rates. It can't hurt your
existing policy to do this since the policy you have can't be
changed once you have it but you could lower your costs.
About the author:
Richard Reich is the author of The Life Insurance
Blog at Lifeinsure.com
and The
Disability Insurance Blog at Protectyourincome.com
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