Katie Adams is a marketing and public relations professional, as well as a freelance commercial writer with 17+ years of experience.
Updated July 07, 2023 Reviewed by Reviewed by Marguerita ChengMarguerita is a Certified Financial Planner (CFP), Chartered Retirement Planning Counselor (CRPC), Retirement Income Certified Professional (RICP), and a Chartered Socially Responsible Investing Counselor (CSRIC). She has been working in the financial planning industry for over 20 years and spends her days helping her clients gain clarity, confidence, and control over their financial lives.
Part of the Series Guide to Life InsuranceLife Insurance Basics
Term Life Insurance
Whole Life Insurance
Other Types of Life Insurance
Raising Money From Your Life Insurance
Taxation on Life Insurance Policies
If you want to buy life insurance, you need to apply and qualify first. Applying for life insurance typically involves filling out paperwork, taking a medical exam, and providing health histories for you and your immediate family. The lower the risk you present to the insurer, the lower you can expect your premiums to be.
Understanding the process of obtaining life insurance can help you get the coverage you need at a price you can afford. Read on to learn about what's involved in buying life insurance from the application process through underwriting and reaching a final decision.
There are two main categories of life insurance: permanent life insurance, which provides coverage for your entire life, and term life insurance, which only covers a set period of time. A local insurance agent can help you better understand your options.
Once you have decided to purchase life insurance, you'll need to determine your coverage amount. Consider how much your beneficiaries will need after you die, how much you already have available through personal assets or group term insurance (such as a policy offered by your employer), and what level of premiums you can afford.
The amount of life insurance coverage you will need depends on several factors, including the age of your dependents, your spouse's earning ability, any outstanding debt you have, and your family's combined financial resources.
Your first step is applying for life insurance coverage with a broker, agent, or directly with an insurance company. The application will ask for basic information such as your name, address, occupation, and employer. It will also typically ask for the following personal information:
While it may be tempting to lie about your weight or other health issues, it's important to tell the truth. If the company discovers you lied about a health condition or lifestyle, it may deny your application. If the falsehood is uncovered after the policy is issued, the company can increase your insurance premium, cancel your policy, or deny a beneficiary's claim to the death benefit.
Some insurance companies only require you to answer health-related questions (such as which medications you take or surgeries you've had) on the application. These no-exam life insurance policies—such as guaranteed issue life insurance and simplified issue life insurance—are usually more expensive and offer lower face values than policies that require a medical exam.
Most companies and policies require an in-person medical exam. A life insurance agent will arrange for a paramedical (a licensed healthcare professional contracted by the insurance company) to meet you at your home, office, or a clinic selected by the insurance company.
During the exam, the paramedical will likely:
There may be additional tests you need to undergo depending on your age, the type of policy you want, and the amount of coverage you're applying for. Additional tests could include an EKG, a chest X-ray, or a treadmill test.
Next, an underwriter at the insurance company will review your application and medical exam results. They may order medical records from your physician to learn more about any medical conditions you have and any treatment received. This information helps them determine the level of risk you represent to the company financially and how much to charge you for coverage.
Once your application and medical exam have been reviewed, the company will either approve or deny your request to purchase coverage. That process can take days or weeks, depending on whether you submitted a complete application, how long it takes to receive lab results, whether the company requests information from your physician, and so on.
If you lie about a medical condition, the insurance company may not only deny you coverage but may also "red-flag" you, This means other insurers will know you were denied coverage because you submitted false information.
If you "fail" the medical exam and the insurance company declines to cover you—or if it offers to cover you at a higher rate due to the results of your exam—you have several options. Ask why you were denied to better understand the available options. You can ask your insurance broker if there is a company that will work with your medical status, or you could apply for a no-exam policy.
If you are offered a policy but aren't happy with the rate, you can purchase it for the time being and then ask to be re-evaluated at a future date (and improve your health or lifestyle risks during that time). Of course, you can enquire with more than one insurance company to seek the best possible life insurance policy for your circumstances. Finally, you can pursue group term life insurance through your employer, which often doesn't require a medical exam.
While you can't do anything about some of the main factors affecting your insurance premium (age, gender, and family medical history), there are steps you can take regarding lifestyle characteristics. You could lower your insurance premium if you:
Other non-lifestyle-related ways to reduce your premium include:
The process from application through approval or denial for a fully-underwritten policy typically takes several weeks. However, timelines can vary among companies, and delays in reports from physicians and other parties can slow down the process further. If you apply for a no-exam or "instant" policy, you can receive feedback within 24 hours.
Many life insurance companies will contact your doctor's office and obtain medical records after you have given permission for them to do so. The doctor's office will complete a medical questionnaire as well. The doctor may also be required to sign an attending physician's statement asserting the veracity of this information.
It is considered insurance fraud if you lie or knowingly misrepresent information on a life insurance application. By signing the policy, you affirm that everything included in the application was accurate and truthful.
In order to take out a life insurance policy on someone else, you need to be able to show that there is an insurable interest in that person. This requires proof that an individual or entity would experience financial or other hardships as the result of the death of a person.
This will vary by location, but the minimum age at which someone can sign a life insurance application in most states is 18. In Washington State, those aged 15 and older must sign any life insurance application someone takes out on them. Parents and legal guardians can take life insurance out on children below the legal age limits.
Understanding the process of obtaining life insurance helps you get the coverage you need at a price you can afford. Knowing the steps you will take and the expected timeline provides peace of mind and fewer surprises. You can also help reduce your premiums by understanding the personal factors insurance companies consider when evaluating applications and setting premiums, and making lifestyle adjustments to minimize those risks.