How to Apply for a Life Insurance Policy

Guest Post by John Holloway

Life insurance should be an essential part of your financial plan. It serves as a safety net for your family in your absence and allows your loved ones to take care of their short-term as well as long-term financial needs.

If you have family members who are financially dependent on you, it is vital for you to insure yourself as soon as possible.

Let’s take a detailed look at the steps involved in purchasing a life insurance policy.

Choosing the right type of policy

First, you should decide if you need a term life policy or a permanent life policy.
A term life policy is designed to cover you for a specific time period (anywhere from 1 to 30 years). It offers a death benefit, which is paid out to your designated beneficiary in the event of your death. It is very cheap and can easily fit into your budget.

A permanent life policy is designed to cover you until your death. In addition to a death benefit, it also offers living benefits in the form of cash value account and dividends, depending on the type of policy you choose. It is typically more expensive than a term life policy.

You can choose the type of policy that accommodates your budget and financial needs.

Determining your life insurance needs

The next step deals with determining your life insurance needs. You can calculate the amount of death benefit you need based on a number of factors including your age, income level, number of financial dependents, amount of debts you have, and your family’s short-term and long-term financial goals.

Getting quotes from multiple companies

This is perhaps the most important step in purchasing a life insurance policy. A surprisingly large number of people overspend on life insurance simply because they fail to shop around and choose an insurance provider randomly. It’s crucial to get quotes from multiple insurance providers.

Getting a free, personalized quote is very easy. You can do it online or over the phone, depending on your convenience.

You have to provide certain details like your age, gender, occupation, location, and basic medical history. You can then get a quote which includes the coverage amount you are likely to receive and the premium amount you have to pay.

You can get quotes from multiple companies in two ways. You can talk to insurance agents who represent different companies and get a quote from each of them. Or, you can contact an online platform like and get quotes from multiple insurance companies at the same time.

Once you have the quotes, you can compare them with each other and choose one that fits your needs.

Choosing an insurance company

There are hundreds of life insurance companies in the United States, so choosing one can be a difficult task unless you know what you should look for.
You should consider these three key factors while choosing an insurance provider:

  • Financial ratings
    Several independent rating agencies evaluate the financial strength of insurance companies and rate them accordingly. The most important among these are Moody’s, Standard & Poor’s, A.M. Best, and Fitch.

If a company has an A rating or above from all four of these agencies, you can have confidence in its financial stability and its ability to honor its commitments.

  • Track record
    Does the insurance company have a track record of settling claims quickly and efficiently? Does it have a support team which addresses the needs of customers and responds to their queries in a timely manner?

Are there too many complaints filed against the company with the National Association of Insurance Commissioners?

Based on the answers to these questions, you can easily decide if the company is the right choice for you.

  • Policies offered
    Not all companies offer the same kind of policies. Since each company has its own underwriting policy, the amount of coverage offered, the amount of premium charged, and the kind of benefits provided differ from one company to another.

You should take a good look at the policies offered by different companies and choose a company whose product range adequately meets your needs.

Applying for the policy

Once you have chosen the insurance company and the right policy for you, the next step is the application process. A life insurance application form requires you to submit a wide range of information including the following:

  • Age
  • Occupation
  • Hobbies, especially dangerous hobbies like scuba diving, bungee jumping, and paragliding
  • Your designated beneficiary
  • Premium payment frequency (monthly, quarterly, semi-annually, annually, or a lump sum payment)
  • Pre-existing health problems, if there are any
  • Prescription drug record
  • Smoking and drinking habits
  • Use of illicit drugs
  • Driving record
  • Credit history, especially if you have filed for bankruptcy in the past
  • Your travel record (places you visited in the past one year and the places you intend to visit in the next one year)

Apart from this, you also have to share the medical history of your parents and siblings, so the insurance company can determine if you are at risk for any genetic disorders.

In some cases, the application process might also involve a phone interview.

The medical exam

Once you submit the application, you will be contacted by the insurance company to schedule a medical exam. A trained nurse will review your medical history, ask you several questions, measure your height and weight, check your blood pressure, and collect your urine and blood samples.

Medical exam is a requirement for most policies. There are, however, policies that you can apply for without undergoing a medical exam. If you are old or have preexisting conditions that could prevent you from qualifying for a regular policy, you can select a no-exam policy.

The underwriting process

This step determines the premium amount you will pay. Based on the details you provided during the application process, the underwriter will determine your mortality risk, give you a health rating, and set the premium amount you have to pay.

Accepting the policy

Once the underwriting process is over, you will be issued a policy in two to three weeks. All you have to do is sign the policy, mail it back to the company, and keep a copy of the policy with you.

Once you make the first payment, the policy comes into effect and stays in force as long as you keep making the payments or until the expiration date.

John Holloway is a co-founder of, a digital life insurance brokerage focused on helping consumers make the best choice when buying insurance.

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