I was talking with Jason Hull a couple of weeks ago after the April meeting of the D/FW FinCon Chapter. Our local band of merry bloggers, which is led by Philip Taylor (www.ptmoney.com), and founder of FinCon, meets once a month to discuss blogging issues related to personal finance. Jason’s a friend and fee only financial planner in Crowley, Texas (www.hullfinancialplanning.com/) and we were discussing blogging topics. He suggested a topic to me that was framed in a question, “Can you get a legitimate on-line life insurance quote?” He was smiling and even I knew that meant he was asking me a question he already had the answer to.
The answer to Jason’s question is a qualified “maybe.” There are a number of issues that impact getting to the real premium amount for a life insurance quote, whether on-line or even through a licensed insurance agent. As a licensed Texas insurance agent for auto, home, life and health, there are two processes that determine a life insurance policy’s premium:
- The initial quote
- Underwriting
Initial Quote: I work with two different brokers and one carrier directly. Between these three sources, I have access to about 18 different life insurance companies. Once the client or prospective client and I have discussed what they want to accomplish with life insurance and what it will take financially to accomplish those goals, I gather information to prepare their quote including:
- The time period needed for the policy (10 years, 20 years, 30 years)
- Their date of birth
- Height and weight
- Have they ever used tobacco products (smoking, chewing or dipping)
- How long has it been since they last used tobacco products
- Does their chest size exceed their waist size
- Is there any family history of cancer, heart disease, stroke or diabetes
- Do they have high blood pressure and are they taking medication to control their blood pressure
- What is their cholesterol reading and are they taking medication to control their blood pressure
- Do you have any of the following items on your driving record
- Moving violations
- Reckless driving violations
- DWI / DUI
- License suspension
- Motor vehicle accidents
Once I have this information, I enter it into the systems I work with and produce a quote that will be accurate as long as the information entered is accurate. There are times, however, when the information the client provides is inaccurate, either because they omitted telling me something or didn’t know something about their physical condition such as an elevated cholesterol or blood pressure level.
Underwriting: Once the client has approved the quote the underwriting process begins. This process has three elements to it:
- Application
- Paramedical exam
- Underwriting review
An application is completed for anyone applying for life insurance. General information is verified, medical questionnaires are completed, beneficiaries are listed and the paramedical exam is scheduled.
The paramedical exam consists of providing a urine and blood sample, being weighed and measured as well as completing a more detailed medical questionnaire by a licensed examiner.
The paramedical exam is sent to the life insurance company’s underwriters while the urine and blood samples are sent to a lab to be processed.
Once underwriting has reviewed the lab report and compared it to the application, one of three decisions is rendered:
- An offer is made that matches the initial quote
- An offer is made but rated differently due to something that popped up as a result of the lab report
- The person is declined at this time based on medical reasons
I have a client who applied for life insurance in February of this year. Everything looked perfect on paper and the initial rate was excellent. I did not see any red flags nor did I have any concerns. I sent the completed application in and scheduled the paramedical exam. His application was declined due to the lab results which showed elevated liver enzymes.
It turns out his paramedical exam took place at the end of the day and he was dehydrated. We discussed it and he went to see his doctor to confirm nothing was wrong. His blood work came back perfect and an offer was extended for life insurance at a rate that was the same as what I originally quoted. He can rest easier now that he knows his wife and son will be taken care of financially even if he’s not there.
Can you get a legitimate on-line life insurance quote? If you’re in perfect shape then it’s possible, but not if they aren’t asking this level of questions. And even if they are, nothing’s fully known until the results of your exam are in, reviewed and approved.
Do you have a question or comment you’d like to share? Post them in the comments section of our blog or on our Facebook page. I’d love to hear from you!
