Getting insurance is really a very straightforward process. Auto insurance you can get without talking to someone online, and life insurance is usually obtained by speaking to an agent. Here we will talk about how to get a whole life insurance policy.
In short: to get a whole life policy you need to fill out an application, which includes your health including a questionnaire of medical conditions and medications, and also some financial questions depending on the type desired. Lastly, the application goes to the company’s underwriting department where they check the questions you answered and double-check if the medical questions were answered honestly. If everything checks out then it is issued with or without changes based on if the rating(risk classification) is higher or lower than when initially applied for.
What do you want life insurance for
First of all life insurance is a great way to protect your assets when you pass away, specifically speaking that’s what the term insurance is used for. Whole life insurance has more living benefits as well as a death benefit. So if you want to get insurance simply to pay for your burial, then final expense policies may be the best option, but so can a term policy or perhaps a mortgage protection policy.
One thing you can do is ask a life insurance agent to help you navigate which type would best suit your situation. Several ways exist to go about determining how much protection you want to get, below I discuss each of these.
Needs analysis
A needs analysis approach is used by adding up the value of your assets and or debts and choosing a coverage type that will take care of these in the event of your death. This is probably most often used for inexpensive term coverage to help keep costs down as much as possible.
Human life value approach
Another approach is to consider how much you are going to make in your lifetime and then base the coverage more on your income earning potential than on expenses. This approach will often lead to larger death benefit policies, obviously higher premiums, and more coverage.
This coverage is going to be much more useful in not only paying off debts but also in helping protect your family with some additional money to figure things out after your passing. As you can see this is a much more comprehensive approach though it is still looking more at death benefit coverage instead of focusing on how to utilize a life insurance policy while alive and grow it during one’s life.
Max cash value approach
That is where this approach comes into play. As I’ve stated in other articles, the one thing almost all wealthy have in common is whole life insurance. As implied in the title of this approach what we do is determine how to maximize the cash value growth of a whole life insurance policy. What this does for you allow you to focus on putting your money to work for you now so that you can get your finances back on track to where you want to be going: fewer money worries, right?
There are a number of different types of whole life insurance that you can get. Each one has a different purpose, final expense, straight life, and others. I’m going to explain them in simple terms of large and small policies.
Types of whole life insurance policies
Small policies
Small policies can range anywhere from a couple of thousand dollars to about $50,000. Generally speaking, these policies are intended to be used as a final expense or burial policies. Sometimes they are also used in mortgage protection to cover mortgage payments for a couple of months up to a couple of years. You can apply for these policies without a medical exam, and sometimes without a questionnaire.
Large policies
In order to get the best rates on any life insurance you will want to do a medical exam, and medical questionnaire and also speak with an agent that truly understands how you want to use the policy.
Large policies are what I use, but that doesn’t necessarily mean we start the policy with a large death benefit. Sometimes it makes sense to minimize the death benefit initially so that we can maximize the cash value growth. Remember that with cash value growth, dividends, and paid-up additions we can increase the death benefit. So it is quite easy to make a $100,000 death benefit(or even less based on use) build into a million-dollar death benefit.
The application process
This process can take 10 minutes or more really depending on how many things one needs to disclose medical-wise, or perhaps how much chatting you all do. For the most part, it is quite simply: what is your health, what has happened within the last 10 years or so, how much protection are you looking for, what riders(options) do you want on the policy, and how much protection are we applying for, what assets do you have, how much do you make and from where, and how do you intend to pay- monthly, semi-annual or annually.
Once this is submitted then you schedule a paramedical exam which is someone comes out to you and takes your blood and perhaps other tests to ensure your health is what you say. In addition, the company will conduct an underwriting process to ensure your other statements are true as well as check mortality tables to assess a risk classification.
All in all, this generally happens within a one to two-month time frame depending on how timely you are with the information you provide your agent to get things moving forward. Everyone has a schedule so nothing is wrong with taking a little longer or even being faster.