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Shopping for a Life Insurance Policy

Estate Planning for Blended Families
It sounds morbid, but when you’re shopping for a life insurance policy, insurers want to know the answer to one question: What’s your life expectancy?

If you are shopping for a life insurance policy, life expectancy is a key determinant of your acceptance to receive life insurance. It also significantly impacts the cost of premiums you will pay. Life expectancy is important because life insurers take on a financial risk by covering you. The higher the chance of an insurer having to pay out your policy, the more you’ll pay and the more difficult it will be to get coverage. As a side note, life insurance can play a significant role in your estate plan, according to Jay Lenox, partner with Beck, Lenox & Stolzer Estate Planning and Elder Law, LLC, LLC.

Market Watch’s recent article entitled“5 reasons you might have to pay more for life insurance” says that if you fall into one of the following groups, you may be deemed a high risk to insure.

  1. You have a pre-existing health condition. This is something such as cancer, diabetes and any type of autoimmune disorder. Morbid obesity is a big risk. However, if you’re managing your pre-existing condition well, insurers will consider that when setting rates. That’s because the more controlled your health risk is, the more favorable it is for your own mortality. That is good for everybody involved. It is a “win-win.”
  2. You work a dangerous job. If you work in a risky workplace, you’ll be treated differently from someone with a desk job. The list of “dangerous” jobs is based on specialized tasks. However, if leave your hazardous job, you can ask your insurer to re-evaluate your rates.
  3. You’re a daredevil If you enjoy the thrill of extreme sports, like car racing, piloting, skydiving, scuba diving, or mountain climbing, you’ll likely have higher life insurance rates. Insurers will consider the level of risk you’re taking and how frequently you participate in these activities.
  4. You’re receiving drug or alcohol treatment. The type of drug and the length of time you’ve been clean play a part. Insurance companies look carefully at relapse rates, as well as the likelihood of contracting diseases through drug use, like hepatitis C.
  5. You have a recent DUI. A DUI is more than a blip on your driving record. It can also impact your ability to get low-cost life insurance. If you received a DUI in the past year, you could expect a higher premium when you apply for life insurance. If you have multiple DUIs over five years ago, you’ll likely pay more than twice as much for coverage as someone with a clean driving record. However, the insurance company may not penalize you for just one DUI that happened five or more years ago.

A tip for you if you are shopping for a life insurance policy- you can increase your chances of approval by working with a life insurance broker or independent agent. They partner with a number of life insurance companies, so they can help you navigate your options. If you need recommendations, contact your attorney or Beck, Lenox & Stolzer.

Reference: Market Watch (Jan. 25, 2022) “5 reasons you might have to pay more for life insurance”


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