With April Fools just around the corner now is a great time to examine some of the common myths we encounter from applicants seeking to buy life insurance. These misconceptions can slow down and sometimes derail the insurance buying process. Here is a quick look at some avoidable mistakes that can improve your life insurance application experience.
Knowing the difference between a quote and an offer
An insurance quote is a projection of the rate class or risk category in which the insurance company— based on the applicant’s age, health, lifestyle, family history, and even credit history— may place the proposed insured. Insurance quotes are provided by agents or quoting websites. The quote is not a formal offer for life insurance and most life insurance applications are subject to a detailed underwriting review. The quote is subject to change based on the findings during this process. A formal offer can only be made by an insurance company. The formal offer is a binding agreement between both parties to accept the terms of the life insurance policy.
Knowingly providing inaccurate information during the quoting process
As an Agent my primary job is to manage the expectations of a client. Not every client is going to qualify for the “Super Preferred” rate class. When beginning the process of purchasing life insurance it is imperative that the client provide the most accurate information available to them. This will empower your agent, allowing them to give you a personalized quote. Furthermore your agent will be able to explain to you why you may qualify for certain rates. Accurate information also helps match you with the insurance company whose underwriting guidelines fit your profile. Company guidelines vary and what one carrier deems to be risky behavior (being overweight or using chewing tobacco) another carrier might be more lenient.
Not keeping the lines of communication open
The underwriting period can be a long drawn out process but it does not have to be. The key to keeping underwriting on schedule is to communicate with your agent. Often times the underwriters will seek additional information from the applicant. This information could range anywhere from a typo on the application, to inaccurate contact information for a client’s physician. By staying readily available to provide this additional information the underwriters will be able to process your application efficiently and thus, if approved, your insurance will be placed that much quicker.
Withholding information from underwriting specialists and your agent
As we’ve detailed in a previous blog purchasing life insurance can be a personal experience, there are a lot of details and records that must be reviewed in order for an applicant to receive a formal offer for coverage from an insurance company. Not only is knowingly falsifying information on your insurance application considered fraud, withholding information can lead to higher rates, postponements or even having your application declined. Purchasing life insurance requires full disclosure from the applicant. The more information the underwriters have access to the better. Applicant’s who provide detailed information regarding their lifestyle give themselves the best opportunity to be offered the lowest rates for which they qualify, according to the insurance company’s underwriting guidelines.
Not placing your policy offer in force or waiting to return policy documents
This could possibly be the biggest mistake of all. When an insurance company makes you a formal offer for coverage do not wait to return your policy documents and premium to have your policy activated. Each day that you delay in returning those documents is an additional day that you are not covered under your new life insurance policy.
Sometimes the lab results taken for underwriting can reveal health issues of which a client was unaware before starting their application, because they showed no symptoms or had not visited a doctor in a while. The revelation of this condition is often a bombshell to the client because just a few weeks ago they believed they were in perfect health. Presumably an unmanaged medical condition can lead to a higher insurance premium. That is both upsetting and could prove costly. If this situation arises when applying for life insurance it is in your best interest to place the insurance policy in force (if offered). At LifeQuote we will competitively shop the insurance coverage for you, but as you all know a bird in the hand in better than two in the bush. Occasionally depending on the condition it may take several months or even years to correct. If you have an offer for life insurance you can buy yourself the time needed to get the condition under control while being covered.
“The Insurance Company doesn’t care about their clients”
As an agent you hear this phrase frequently. It is an age old myth passed down from generation to generation that the insurance companies are greedy and only want to raise their client’s rates. In actuality this stereotypical notion could not be farther from the truth. Insurance companies as with all consumer driven businesses cannot survive by alienating their clients. When I encounter a client who feels this way I ask them to apply this train of thought to the local businesses they shop at in their own communities. For example does my local electronics store not value my business because they will not sell me their newest and largest television for $100? Does my local bank not value my 20+ years of loyalty because they will not approve me for a $1,000,000 loan with no collateral? Insurance companies value their clients and appreciate their loyalty. In order to maintain their financial security (why you chose them in the first place) they must accurately assess the risk of their potential clients to stay strong in industry rankings.
Avoiding these mistakes and misconceptions can lead to more pleasant insurance buying process. Knowledge is indeed power. The more your agent knows about you the better they can serve you. The better they serve you the more confident you feel about your purchase. As always consult with a licensed insurance professional before purchasing any insurance product. For a free, no obligation quote visit us at www.lifequote.com