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One of the most common questions our clients ask us is, “What is the process for applying for life insurance?” Or, “How do I apply for life insurance?”

In this article, we’ve explained the 5 steps to applying for life insurance, from “getting quotes” to “getting covered”. If you’re a visual person, that’s okay too! We’ve also created this illustration to show you the process of applying for term life insurance.

5 Steps to Applying for Life Insurance:

1. Determine Your Need for Coverage
2. Shop the Market for The Best Rates
3. Complete Your Application over The Phone
4. Schedule Your Free In-Home Exam
5. Finalize Your Policy and Accept Coverage
6. Questions? We Can Help!

1. Determine Your Need for Coverage

In other words, what are you going to protect and who will receive the money from your life insurance policy if you pass away? If you are shopping for family protection, there are two commonly accepted ways to determine the amount of coverage you need.

If you already have your beneficiaries picked out and you know how much coverage you need, skip to here.

Income Replacement:

The first and easiest method to determine the amount of life insurance you need is called, income replacement. With this method, you’re replacing your take-home pay for a set number of years. To determine the amount of life insurance you need to replace your income, calculate your take home income by the number of years until you plan to retire.

In other words, if you’re 45 today and plan to retire at age 62, you need to replace 17 years of income (62-45=17).

With this method, we recommend purchasing a term that will extend past your planned retirement age. Term life insurance is sold in 5-year increments usually for 10, 15, 20, 25 or 30 years. In this example, we would recommend a 20-year term because it extends past the length of your financial need. In the future, you can always cancel your policy with no penalties, or reduce your coverage and the monthly cost of your insurance.

Once you reach your planned retirement age, your need for life insurance should diminish because you’ll have access to your retirement savings and benefits. If you still need a small amount of life insurance, having a longer term may benefit you; many life insurance companies will allow you to convert a your term coverage into a permanent life insurance policy.

Needs-Based Assessment:

If you have multiple life events that you’d like to insure, such as a mortgage and college funding for your children, you may want to consider a needs-based approach. With a needs-based assessment, the amount of coverage you need to purchase is determined by your largest debts.

To determine the amount of coverage you need, add up your largest financial obligations and account for the number of years it will take to accomplish them.

For example, if you have 25 years left on a mortgage with a balance of $400,000, a business loan with a balance of $145,000, and an investment property with a 20-year, $250,000 mortgage; you’ll want to buy at least $795,000 in coverage for 25 years ($400,000+$145,000+$250,000).

In these situations, layering or laddering multiple term policies may save you a considerable amount of money. Instead of purchasing one term policy with a face amount of $795,000 for 25 years, you could purchase 3 separate policies instead and save up to 40%.

• One $400,000 – 25-year term policy for your mortgage,

• One $145,000 – 10-year term for your business loan, and

• One $250,000 – 20-year term for your investment property.

While laddering your coverage will likely save you money, if it seems like too much work, don’t worry. Many life insurance companies will also allow you to decrease your coverage and the cost of your policy at least once.

Selecting A Beneficiary:

If you’re purchasing a policy for family protection, we usually recommend listing your spouse as your policy’s primary beneficiary. You should also name a contingent beneficiary in the unlikely event that something happens to you and your spouse at the same time.

If your children are minors, you may want to list the relative that will likely take custody of your children if you’re no longer in the picture. Your policy’s beneficiaries can be changed at any time, but it’s better to have them picked out before you apply for coverage.

If you’re unmarried, we recommend listing a beneficiary that is financially stable and can be trusted to carry out your final wishes. Common beneficiaries include: domestic partners, relatives, friends, or business partners. You can also list a trust as your beneficiary and appoint someone to serve as your trustee.

If you’re not sure how much coverage you need, that’s okay, we’re here to help. We can assess your needs and help you determine the amount of coverage you need to accomplish your goals. You can also use the guide we’ve created, “How Much Life Insurance Coverage Should I Buy?”

2. Shop the Market to Save Time and Money

Every life insurance company offers its own unique pricing, coverage options, and underwriting guidelines. Some companies tend to focus solely on insuring young and healthy applicants, while other companies specialize with older applicants, or applicants who are considered to be a “high risk” for life insurance.

Regardless of your health or age, comparing rates from someone other than your home and auto insurance provider will likely save you hundreds, if not thousands, of dollars on the cost of your life insurance. This is why our agency is licensed in 49 states and represents more than 60 top-rated life insurance companies.

When shopping and comparing options, your agent will ask you some questions about your health and lifestyle to determine which companies will be your best match. These questions generally include: your height and weight, medical/prescription history, and tobacco use.

Most life insurance companies will also ask about your lifestyle to determine if you have a hazardous occupation, dangerous hobbies, or if you plan to travel to any of the countries listed on the State Department’s Travel Warning list such as North Korea, Syria, and Iraq.

All of our agents offer at least 5 years of experience as “pre-qualification underwriters” which allows us to quickly compare your medical history and lifestyle answers to each insurance company’s unique underwriting guidelines. We’ve saved our clients up to 73% on the cost of their life insurance simply by matching them with the company that is the best fit for their health and lifestyle.

We are licensed to do this for you…and there is no cost for our shopping services. We’ll save you the time and hassle of calling multiple companies to find your most affordable options for coverage.

3. Complete Your Application Over the Phone

Once we determine the best insurance carrier for the type of coverage you need, your agent will help you complete an application over the phone. This process typically takes about 10 to 15 minutes, and after your application is completed, we’ll email you a copy for electronic signature and review.

Applications generally include: your name, address, phone number, email address, employer (if applicable), policy beneficiary, and whether you’re adding to existing life insurance, replacing it, or applying for new coverage. Most life insurance companies will also review your driving records, so it helps to have your driver’s license available as well.

There is no cost to apply for life insurance, and once your policy is approved, you’ll have an option to adjust the amount of coverage you accept, if needed. To learn more about your policy’s “free-look” period, please skip to here.

4. Schedule Your Free Exam

After you’ve signed your application, your agent will help you coordinate with an examiner to schedule a free in-home exam. For best results, we always recommend scheduling your exam first thing in the morning, before you’ve had breakfast or coffee. The examiners are usually available Monday through Saturday from 8am to 6pm, but availability may vary based on your location.

The exam is paid for by the insurance company, whether you buy their policy or not. Most people schedule the exam at their home, but you can also visit an office if you prefer. The mini-medical exams are performed by a local licensed nurse or phlebotomist in your area. (If you do not want to take an exam, please see our article, No-Exam Term Life Insurance”)

During the exam, the nurse will check the following:

• Measure your blood pressure and heart rate

Insurance companies realize that some people become anxious during an exam which results in a higher reading (also known as “White-Coat Syndrome”). If your initial reading is elevated, don’t worry, the examiner will measure your blood pressure several times and use an average of the readings.

• Measure your height and weight

Life insurance companies measure your height and you weigh to assess your “build” or body mass index. Luckily, most insurance companies are extremely lenient here. To learn how your build will affect your rates, please read our article, “How Does My Weight Affect My Life Insurance Rates”.

• Obtain a blood and urine sample

Life insurance companies require a blood and urine sample to evaluate your cholesterol, A1C blood sugar levels, and your kidney and liver enzymes. If you are over the age of 50 and applying for more than $500,000, the life insurance may also require an EKG or chest X-ray.

• Review your application before submission

It is important to triple check all the information on your application to make sure it’s correct. This would include anything that pertains to your lifestyle, for instance if you use any tobacco products, recreational drugs, or participate in any extreme sports or activities such as skydiving. Life insurance companies share information, and insurers will generally run checks through MIB (Medical Information Bureau), DMV, and the Pharmacy Database to verify your answers.

Once your medical exam is complete and your lab results are received, the insurance company’s underwriter will review your results, as well as your driving records and medical records to determine your “risk” or “rate class” for coverage. Besides your age and gender, your rate class has the largest impact on the cost of coverage.

Preferred best is the top rate class, but only 5-8% of us qualify for it. The top rate category is followed by: preferred, standard plus, and standard. After standard, the life insurance companies use a table-rating system for a total of up to 16 different rate classes. Here’s the real kicker, what’s “preferred best” with one company might be “standard” with another. As an example, to qualify for State Farm’s top rate category, you must have a total cholesterol of 175 or less. Transamerica on the other hand, offers more leniency for their top rate category with a cholesterol limit of 220.

If your cholesterol came back a little higher than you expected, or if you’ve gained a few pounds since your last trip to the doctor, don’t worry! As independent life insurance agents, we can move your application from one insurance carrier to another, without requiring a second exam. Remember, every company has its own underwriting guidelines and pricing. If moving your application to another top-rated company with more lenient cholesterol or weight guidelines will save you money, no problem!

On average, it takes about four to eight weeks to get an approval for life insurance. The length of time it takes an insurance company to approve your application heavily depends on how quickly your doctor provides the insurance company with a copy of your medical records.

If you need life insurance in a hurry, you may want to consider a no-exam insurance policy. These policies determine your rates by electronically reviewing your medical records in minutes, not weeks. They may cost a few extra dollars, but they do not require an exam. To learn more about purchasing life insurance without an exam, please read, “No Exam Term Life Insurance Advice.”

5. Finalize Your Policy and Accept Coverage

When your application is approved, the life insurance company will send you a copy of your policy for review. Once your policy is mailed to you, a 30-day period known as your “free-look” is activated.

The “free-look” is your time to review and determine whether or not to accept your approved policy, before making a payment. After the 30 day “free-look” period has ended, the life insurance company can rescind their offer for coverage to you or re-request proof of insurability.

During the 30-day “free-look” period, you can:

1. Accept the coverage – If you don’t need to make any changes to your policy, make your first payment to activate your coverage.
2. Decline your offer for coverage – If you decide not to accept your policy, no money is due, and there are no fees or penalties.
3. Adjust the policy amount and/or term – Once your policy is fine-tuned to your needs, make your first payment to activate your coverage.

*Please note: If you’re unsure how much life insurance you need, apply for the highest amount you wish to consider. Like a mortgage approval, you can reduce the amount of coverage you accept. If you decide to increase your coverage after approval, the life insurance company may require additional underwriting.

We Can Help You with All Your Life Insurance Needs

At Term Life Advice, our licensed agents offer decades of combined experience and we have helped thousands of clients with their life insurance needs. We understand that everyone’s situation is different, which is why we represent so many different insurance companies.

Our goal is to make your life insurance shopping and buying process as easy as possible. You’ll be treated respectfully and honestly. We’re an owner-operated agency and our agents do not have sales goals or quotas, we’re here to help, and we look forward to earning your trust.

Give us a call to start your application today! Or you can request a free quote below to instantly compare rates from dozens of top-rated companies. Toll-free: 855-902-6494.