Shopping & Maintaining Coverage

Hey everyone, Jason here with another episode of Life Insurance 101. Today we're diving deep into shopping for and maintaining life insurance coverage. I'll walk you through everything from medical exams to comparing policies, and even help you understand the claims process for your beneficiaries.

Let's start with medical exams and underwriting, since this is often what makes people most nervous about getting life insurance. Here's the truth - it's really not that bad. When you apply for life insurance, the insurance company needs to assess your risk level, and they do this through a process called underwriting. Part of this usually involves a medical exam, which is typically free and can even be done in your own home.

The medical exam usually takes about 30-40 minutes. A licensed healthcare professional will check your height, weight, blood pressure, and pulse. They'll also collect blood and urine samples. These tests help insurance companies understand your overall health and determine your premium rates. They're looking for things like cholesterol levels, blood sugar, nicotine use, and other health indicators.

Some companies now offer no-exam policies, but keep in mind these usually come with higher premiums since the insurer is taking on more unknown risk. If you're healthy, it's usually worth getting the exam to secure better rates.

During the underwriting process, insurers will also look at your medical history, family health history, driving record, and sometimes your credit history and hobbies. Be honest during this process - if you withhold information, it could lead to claim denial later.

Now, let's talk about comparing policies, because this is where many people get overwhelmed. There are a few key factors to consider when shopping for life insurance. First, decide between term life and permanent life insurance. Term life provides coverage for a specific period, usually 10, 20, or 30 years, and is generally more affordable. Permanent life insurance, like whole life or universal life, provides lifetime coverage and includes a cash value component, but comes with higher premiums.

When comparing policies, look beyond just the premium cost. Consider the death benefit amount - this should be enough to cover your family's needs, including mortgage, education costs, and lost income. Look at the insurance company's financial strength ratings from agencies like A.M. Best, Moody's, or Standard & Poor's. These ratings indicate the company's ability to pay claims.

Pay attention to policy riders too. These are additional features you can add to your policy. Common riders include accelerated death benefits, which allow you to access part of your death benefit if you become terminally ill, or waiver of premium riders, which cover your premiums if you become disabled.

Get quotes from multiple insurers - I recommend at least three to five different companies. Remember that each company has its own underwriting criteria, so you might get significantly different rates from different insurers.

Once you have your policy, it's crucial to review it regularly - I recommend at least once every year or two. Life changes, and your insurance needs change with it. Major life events like marriage, having children, buying a house, or starting a business might mean you need more coverage. On the flip side, paying off your mortgage or having kids finish college might mean you can decrease your coverage.

During your review, check if your beneficiaries are up to date. Life events like divorce, remarriage, or the death of a beneficiary might require updates to your policy. Also verify that your contact information is current and that your premium payments are up to date.

Now, let's talk about the claims process, because this is ultimately what life insurance is all about - making sure your beneficiaries can access the death...