Smith: Learning about life insurance

Business columnist Doreen Smith helps guide you through the issue of life insurance.

The underwriting process of life insurance is important

If you are thinking about purchasing life insurance, you may find the application process and underwriting of life insurance a worthwhile topic to review.

Insurance is purchased by you the consumer to pay out upon a financial loss.

Vehicle insurance is purchased to pay a claim due to an accident where your vehicle is involved; home insurance is purchased to pay a claim with your house or contents; life insurance is purchased by consumers to pay out a lump sum amount after death.

Insurance is purchased by you the consumer to pay out upon a financial loss.

Purchasing life insurance may not be as easy as purchasing vehicle or home insurance—because life insurance companies agree to pay out a lump sum after death—based on the individual.

When someone applies for life insurance, there is a strict underwriting process by the insurance company.

Life insurance is underwritten before the policy is issued.

At time of application all relevant information about health and financials is requested by the insurance company.

Medical history of the applicant and of their immediate family, income and lifestyle and occupation are questions to be completed by the applicant.

Age, female or male, non smokers or smokers are all factors in determining the premium.

Non smokers pay approximately half the premium a smoker pays.

Males typically pay a slightly higher premium than a female for life insurance.

Life insurance premiums vary upon the health and lifestyle risk of the insured.

You can receive standard health, preferred health, a rated premium, which means an additional increase or a decline.

If you have excellent health, you may receive an additional discount by the underwriter.

There is no guarantee of a life insurance policy being issued.

You have to be an accepted health and lifestyle risk.

The review of this information by the underwriter allows the insurance company to properly evaluate a potential insured person’s suitability for coverage.

Underwriting refers to the process used to access the eligibility of a customer to receive insurance.

Insurance underwriters evaluate the risk and exposure of potential clients.

They decide how much coverage the client should receive, how much they should pay for it, or to accept the risk and insure them.

Underwriting involves measuring the risk to determine the premium charged to insure that risk.

Each insurance company has its own set of underwriting guidelines to help the underwriter determine whether or not the company should accept the risk.

The information used to evaluate the risk of an applicant for insurance will depend on the type of coverage involved.

With life insurance you name a primary beneficiary and contingent beneficiary to allow the proceeds to be paid directly to the beneficiary after death.

Upon a passing, life insurance is typically paid out within a few weeks after death.

The certified financial planners designation means the advisor is technically competent in the area of life, disability and critical illness insurance and must continually meet education, examination, experience and ethical standards.

When you decide to purchase life insurance, contact a broker who will shop for the best rates and coverage’s for you.

Does life insurance pay upon death? Manulife Financial recently stated between 2007 and 2010 they paid out 99.8 per cent of all life insurance claims.

Life insurance should be purchased instead of mortgage insurance or creditor insurance.

Protect yourself or someone you love with life insurance.

Doreen Smith is a Life Insurance Broker and Certified Financial Planner with Capri Wealth Management Inc.

250-869-3825

dsmith@ capri.ca

 

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