How to qualify for life insurance
Life insurance provides a way to leave money behind for loved ones when you pass away. Further, it can offer various benefits during your life. But who can qualify?
Getting approved will depend on a variety of factors, including the state of your health, finances, lifestyle choices and more. Here's a closer look at life insurance overall and how to qualify.
What is life insurance?
Life insurance is a type of insurance coverage that pays a death benefit to your chosen beneficiary when you die. It can help to cover your end-of-life expenses, pay off your outstanding debts and provide financial support to your dependents after your death. Additionally, permanent life insurance policies include a cash value component that can function as an investment vehicle and a financing source during your lifetime.
If you don't currently have life insurance or you're unsatisfied with your current plan, check out your options and compare rates now.
Like most insurance policies, life insurance requires you to select the amount of coverage you want and pay your premiums to maintain coverage. When you die, your beneficiary can file a claim and receive the death benefit payment. That said, there are various life insurance types so it can work differently depending on the plan you choose.
How to qualify for life insurance
When it comes to qualifying for life insurance, providers are going to assess your life expectancy. Their revenue comes from premiums payments so they need to estimate how long you'll make payments before they pay out the benefit. For term policies, they assess the likelihood that they'll need to pay out the benefit at all. Common factors that are considered include an applicant's:
- Age
- Gender
- Height and weight
- Health conditions
- Family health history
- Driving record
- Credit
- Criminal history
- Dangerous hobbies
- Lifestyle habits
- Financial information
The longer your estimated life expectancy, the better your chances of getting affordable life insurance coverage. It never hurts to have a backup plan on top of your other income and investments. Start browsing life insurance plans today.
Just note: You may experience difficulties getting coverage in certain circumstances such as if you have a serious pre-existing health condition, participate in risky activities like skydiving or are an alcoholic.
How to get life insurance
How do you go about getting life insurance? Here are four steps you'll need to take.
Determine your needs
A good first step is to evaluate your needs. Consider purposes, such as:
- Covering your funeral and burial costs
- Providing financial resources to dependents after your death
- Paying off outstanding debts and taxes
- Leaving behind a tax-free inheritance
- Gaining an investment account that offers tax-free growth
- Establishing a loan source for the future
Then consider if you need it temporarily or want it for life. From there, you can estimate how much coverage you'll need for each purpose and overall.
Shop around
With an idea of the type of life insurance you want and the amount of coverage you need, start your search for a provider. Get a free quote within minutes.
Life insurance companies vary in their offerings, qualification requirements, costs, payment options and more. Shopping around can help you find the best deal. Once you find a few companies that look good, contact them to get quotes. Quotes are often based on a few basic questions and give you a ballpark idea of what a company will offer.
Apply
After gathering a few quotes, decide which company's offering looks best and then apply with that insurer. Life insurance applications often involve a lengthy set of questions about your health, finances and lifestyle. Insurers may also require you to undergo a medical exam with a licensed physician. Once finished, you'll find out if you qualify and the premium rate available to you.
Sign up and make a payment
If the life insurance policy ends up being a good fit for your needs and budget, you can sign the paperwork and make your first payment. While monthly payments are common, you can also typically opt to pay on a quarterly, semi-annual or annual basis. You'll have coverage as per the contract as long as you continue to make your payments on time.
Life insurance can not only help to take care of your loved ones after you die but can serve as a source of financing and an investment vehicle during your life. Not sure where to start your search for coverage? Here are some ways to find a reliable provider.
What are the different types of life insurance?
Life insurance isn't one size fits all. The main types you can choose from include:
- Term life insurance: Term insurance provides temporary coverage for a set period — often 10, 15, 20 or 30 years. If you die during the term, your beneficiary receives the death benefit. If you don't, no payout is made. Depending on the insurer, you may be able to extend or convert term policies when they expire.
- Whole life insurance: Whole life insurance offers permanent coverage with fixed premiums, a guaranteed death benefit and a guaranteed rate of return on the cash value component. It remains in place as long as you make the required payments.
- Universal life insurance: Universal insurance is also permanent coverage with a cash value component. However, the premiums are adjustable, the cash value is not guaranteed and the death benefit can be flexible. The flexibility can make the insurance more affordable throughout your life but doesn't come with the guarantees of whole life insurance.
While term life insurance is often the cheapest option, it only offers coverage for a set period. There's no payment for your beneficiaries if you outlive the policy. Further, there's no cash value component. However, this may be the best route if you want the most affordable coverage for a limited amount of time — such as when you're raising children and paying off a mortgage. Whole and universal coverage offer more perks but come at a higher cost.
