How do I obtain life insurance?
To obtain life insurance protection you must first have a need for life insurance. A need for life insurance can encompass many different areas:
- Family Protection
- Mortgage Protection
- Final Expense
- Buy-Sell Funding
- Estate Planning
- Charitable Giving
There are other reasons people wish to purchase life insurance, but the items above are the most common. Let’s take a look at some of the reasons someone might want to obtain life insurance.
Family Protection is a very common reason for coverage. This allows someone to protect their family if something should happen to them. Most often this is related to income replacement. To replace your income so your family could go ahead living the lifestyle that are accustomed to makes this a popular reason people try to obtain life insurance.
Mortgage Protection is also another reason why people buy life insurance. A home is typically one of the largest investment you will ever make. Purchasing a policy to pay off any outstanding mortgage makes good financial sense.
Final Expense life insurance is another common reason for purchasing life insurance. This type of coverage is used to pay for any burial expenses, taxes or outstanding debts that someone might need taken care of.
Buy-Sell funding using life insurance is typically used in a business setting. Business partners who own a share of the business will draw up an agreement that allows them to each sell their portion of the business back to the other partner should one person die. Funding this agreement with life insurance easily lets them plan should this event occur.
Estate Planning can also be a good reason to get life insurance. Someone with a large estate may estate taxes to be paid or need to set up a trust to fund financial planning. A life insurance policy can be a great way to leverage funds toward this goal.
Charitable Giving is another way that life insurance can be used. Someone who is charitably inclined can include a life insurance policy in their planning goals. This allows them to easily designate future funds for charities that enjoy giving to.
Can I obtain life insurance if I have health issues?
One of the main obstacles with obtaining life insurance is underwriting. Underwriting is the part of life insurance that sometimes keeps people from purchasing coverage.
Why? Because some people may think they are uninsurable. The goal of the life insurance carrier is to assign a risk to each application. This risk is determined primarily by assessing an individual’s medical history
The health of the prospect plays a major role in what rate you will qualify for when applying for coverage.
Other factors include your age, smoking status, family history and financial situation. Let’s take a look each of these issues.
Health History– goes a long way in determining if you qualify for life insurance. If someone has a history of diabetes, heart disease or cancer the underwriting insurance carrier will want to know more information.
It’s important to remember that each life insurance carrier underwrites differently. One company may do a great job in offering better rates for heart patients,. On the other hand another carrier may do a better job underwriting for someone with Crohn’s disease. The secret is finding the right carrier for your particular situation.
Age– since life insurance is a numbers game, it only makes sense that age plays a big factor. Although rather obvious the younger you purchase life insurance the lower your rate will be.
Smoking Status– The use of tobacco products can and typically does influence the rate you would pay for life insurance. But, it is important to remember again that not all carriers look at this the same.
Depending on what type of tobacco, how long it has been since stopped using or simply how much do you use now could be different with each carrier,
Financial Justification-One of the areas that an underwriting company will look at is your financial justification for obtaining life insurance. They want to know why you are purchasing coverage, how much you wish to purchase and can you pay for it?
For most individuals this is not a large hurdle. Anyone with someone that counts on them for a financial need has justification to obtain life insurance.
Putting it altogether
When it comes to trying to obtain life insurance protection it is best to work with an experienced broker. An experienced broker with knowledge in the impaired risk side of the life insurance industry can make all the difference in the world in what your outcome is.
They will know the questions to ask, the information they need and the ability to negotiate on your behalf.
A good experienced independent broker will save you time, aggravation and money.
If you need assistance with your search, please reach out to our office at 678-207-8160 or mike@specialriskterm.com
