Applying for Life Insurance
Please do not cancel any current life insurance coverage until your new life insurance policy in force and you have examined it within your “free look” period.
Topics:
- When you say “standard”, “preferred” or “preferred plus” rates, what does that mean?
- What is needed in order to get an accurate quote?
- What is my cost of applying for life insurance?
- If it doesn’t cost me anything to apply, how do you make money?
- What is a “Temporary Binder” or “Conditional Receipt”?
- How do I obtain this temporary coverage?
- What happens if I take the temporary coverage and my policy is approved?
- What will the final price of my policy be?
- What does signing a replacement form mean?
- How do I choose a beneficiary?
1. When you say “standard”, “preferred” or “preferred plus” rates, what does that mean?
These are categories that insurance companies use to determine what life insurance will cost based on the client’s health and personal and family medical histories. If you are generally free of health problems, you will likely qualify for “preferred plus” rates, which offer the least expensive premiums.
Keep in mind, however, that the categories vary from company to company. So although you may have some health issues that keep you from qualifying for “preferred plus” with one insurer, you may be offered those rates with another carrier.
2. What is needed in order to get an accurate quote?
When you speak with our agents to obtain a quote, they take many factors into consideration. They may ask you questions regarding your health, age, gender and activities that you pursue. Any insurance agency can give you a quote based on the best-case scenario, but our office strives to let you know up front what price you will qualify for based on our understanding of each life insurance company’s underwriting guidelines. A quote is not an offer of insurance. The insurance company makes the final decisions of whether to offer a policy and what premium to charge.
3. What is my cost of applying for life insurance?
Absolutely nothing. There is no cost or obligation to you when you apply for life insurance. The carrier will absorb all the costs, including the medical examination. You do not have to pay anything until you have selected a policy and the carrier has agreed to insure you. (Termporary or conditional insurance may be conditioned on the initial premium being paid when the application is submitted. Every term life policy has a “free look” period giving you time to examine your policy and return it for a full refund if you are not satisfied with it.
4. If it doesn’t cost me anything to apply, how do you make money?
When you purchase life insurance through us, LifeSource Direct.com receives compensation from the insurance companies we represent. The compensation may include commissions when a policy is purchased or renewed, and fees for marketing and administrative services and educational opportunities. The compensation may vary by insurer and the specific product and features purchased. We may be entitled to receive bonuses and incentive trips or prizes associated with sales or sales performance.
5. What is a “Temporary Binder” or “Conditional Receipt?
Most life insurance companies offer what is called a Temporary Binder or Conditional Receipt. This is an opportunity to be bound by temporary insurance during some or all of the underwriting process. But the amount, conditions, and limitation of such coverage can vary by insurance company. Our professional sales staff can help explain the program of the life insurer you choose.
6. How do I obtain this temporary coverage?
Simply sign these forms contained in your application and submit your first premium payment with your application and the life insurance company will provide temporary or conditional coverage under its program. Because each life insurance company’s process varies slightly, be sure to consult with your LifeSource Direct.com agent for information about the terms, conditions, and limitations of your insurer’s program.
7. What happens if I take the temporary coverage and my policy is approved?
The money you submitted at the time of the application for the temporary binder will be applied to your first premium payment. If for some reason, the policy differs from what you were quoted or if the coverage is declined, the life insurance company will refund your money. You will also have an opportunity to examine a new policy within the “free look” period and return it for a refund if you are not satisfied.
8. What will the final price of my policy be?
The final price of your policy is determined by the life insurance company at the end of the underwriting process. As soon as they notify us of their decision, we will contact you to let you know the details of the approval. Usually, the final price is the same or very close to, the quote we provided you.
9. What does signing a replacement form mean?
Most states strictly regulate the replacement of existing life insurance coverage. If you apply from one of those states and you are even thinking about replacing or lapsing your current insurance policy, the life insurance company is required to have this signed form in your file. By signing a replacement form you are NOT canceling your current coverage, nor are you indicating that you have officially decided to do so. A replacement form allows the insurance company to contact your current life insurance provider and let it know you are thinking about replacing its coverage.
10. How do I choose a beneficiary?
The beneficiary must demonstrate what is called an “insurable interest” in the person insured by the policy. By this, the life insurance company simply means that there needs to be a reason why this person would need the death benefit if the insured person were to die. Most commonly, beneficiaries are family members, business associates, trusts, or charitable entities.
