Life Insurance Medical Exam

When applying for a life insurance policy, you may be asked to take a medical exam. Generally, if you’re under age 40 and applying for life insurance coverage of less than $100,000, you probably won't have to take a medical exam. However, the older you are, the less life insurance you can buy without a medical exam. Of course, these figures also depend on your health history and the underwriting guidelines of the insurance company you choose.

A typical medical exam may include a basic physical, blood work, and urine tests. Some insurance companies also require EKGs and/or treadmill EKGs (stress tests), especially for large life insurance policies. You'll also have to provide information on your medical history, including the names of doctors you've seen, dates you saw them, and any treatment recommended. A nurse or doctor (often an independent contractor) who is paid by the insurance company will normally conduct the exam.

If you have a medical condition, there's really nothing you can do to hide it. In fact, you shouldn't even try. Insurance companies have access to an amazing amount of medical information through the Medical Information Bureau, so even if you attempt to obscure the facts, there's a good chance an insurance company will find the information it needs. In addition, if the insurance company discovers you have withheld information, it will look at everything else much more closely. And if you died as a result of the illness, your insurance company may opt not to pay your death benefit.
There are a number of simple steps you can take to make sure you get the best possible results at your medical exam:

• Get a good night's sleep the night before the exam
• Fast for eight hours before the exam if possible to ensure the most accurate results
• Don't smoke for at least one hour before the exam
• Avoid caffeine for at least one hour before the exam
• Avoid alcohol for at least eight hours before the exam
• Don't engage in strenuous exercise for 24 hours before the exam
• Limit your consumption of salt and cholesterol for 24 hours before the exam
  Cancel the exam if you get sick – even a minor infection can distort the results

Ways To Save When Buying Life Insurance

When it comes to shopping, savvy shoppers get the most for their money. This stays true not only when shopping for groceries or food, but for life insurance as well. So to help you get the most bang for your buck, Insurance.com has compiled a list of ways you can save the most when you're in the market to buy a life insurance policy.

1. Is term life insurance for you? If most of your goals are short-term and you're not as interested in saving for the long run, term life insurance is for you. Term life insurance typically offers you the most coverage for the least amount of money, and is set up based around spans of time. For example, you may get a term life insurance plan that is set to pay out after five, ten or 20 years.

If your main goal is to save money, and you don't mind paying a higher premium, it would be wise to look into a whole life insurance policy. Whole life policies offer a "cash value" feature that helps you save money each time you make a payment on your premium. However, though you can withdraw funds from the cash value, your death benefit will decrease. If you take out a loan and it exceeds the amount you have already paid for on the premium of your whole life insurance policy, you will receive a tax bill. Also, it's good to note that as time moves on, the cost of insuring you will go up, and your cash value will begin to decrease.


2. No-load policies. To find lower premiums for variable life insurance, be sure to keep an eye out for "no-load" or "low-load" life insurance policies. These policies have fewer added fees, such as agent commission or fees for marketing, which makes a higher percentage of your premium go to your cash value. To find theses policies, check with a financial advisor who doesn't collect commission from life insurance companies, or inquire around. Some insurance agencies even sell these directly to the customer!

3. If you're healthy, stay away from guaranteed issue policies. Guaranteed issue policies, also know as "simplified" or "quick" policies, may sound too good to be true, because they really are. They do not require a medical exam, making them seemingly ideal, but ultimately much riskier for the insurer. If you are healthy, you will get much better rates by buying a life insurance policy that requires a medical test.

However, the problem for those who buy into guaranteed issue policies is that many may end up paying more in premiums than their beneficiaries receive from their death benefits. The National Association of Insurance Commissioner (NAIC) is trying to find a solution or way to put an end to this. Regulation of rates is not something they plan on doing, but a disclosure statement warning consumers is in the works.

4. Check online. When shopping around for any kind of insurance, looking online is a great way to compare prices and see what different companies have to offer. The more information you give, the more accurate your insurance quote will be.

5. Make a change for the better. If you are overweight, are a smoker, have heart disease, high blood pressure or diabetes, finding affordable life insurance may be difficult. This is because the better your health is, the easier and more affordable it will be for you to buy life insurance. Insurance companies will issue lower premiums if the policyholder is in good health standing. The less things that may give you a risk of dying sooner, the more affordable your life insurance policy will be. Also, if you do have an outstanding medical condition, you are a smoker or overweight, and you are trying to better your health, be sure to document it. By showing the insurance company your medical files and that you have been trying to improve your health, you may save yourself some money in the long run.

Many life insurance companies have different categories for medical conditions or combinations of medical conditions, when it comes to issuing you a policy. They also have different tests and medical exams you may need to go through before they will issue you a policy. This may have a major impact if you're a smoker. Even if you quit the day you apply, you will still be considered a smoker, because to be completely "nicotine free," you would have had to quit smoking for two to five years prior. Smokers do generally pay at least three times more than nonsmokers for a life insurance policy, so by quitting, you're not just saving money from not buying tobacco, but also by bettering your standing.

Being overweight is another reason you may have a higher life insurance premium. Though you may not be obese, once your weigh reaches a certain level, you become more of a death-risk. So by taking the steps to lose weight and get healthier, you are not only helping yourself live longer and feel better, but also helping to get more affordable life insurance rates.


6. Buy what you need. It's not a good idea to under-buy insurance, nor is it beneficial to over-buy, so when you're in the market for insurance, be sure to evaluate what your exact needs are and go from there. A good way of doing that is in the form of an equation: Short-term needs + long-term needs - resources = how much life insurance you will need.

7. Rider policies are helpful. A rider policy is an extension to an insurance policy that helps you extend you coverage. If your needs change, it may be more cost-effective to purchase a rider policy for additional life insurance-it also doesn't affect your cash value. Be sure to shop around though, you may save more by actually buying a second policy.


8. Buy early. Instead of waiting until there is a real problem with your health, buy life insurance early in life. As you age, the price of your life insurance will increase, so the younger you start, the more you will save. To keep your premium low, you may want to inquire about a "level premium" policy. Which keeps your premium rates the same for a set amount of time.


9. Run your credit report. If there are problems with your credit, you may be denied for an insurance policy or your premiums will sky-rocket because you are considered high-risk. If your credit score is low, the insurance company's main concern is that you will let your policy lapse due to non-payment of premiums. So by rebuilding your credit, you are not only helping that financial aspect of your life, but also the one concerning your insurance.

10. Fractional premiums. Some insurance agencies charge less depending on how you schedule your payments. By paying fractional payments-those are fewer payments over the year-you may pay less over all. For some life insurance companies the same also goes for electronic funds transfer (EFT), which is when they take out the amount of the premium directly from your checking account.

11. Being responsible saves you money. This goes along with making a change for the better. If you are in an expensive rate class due to high cholesterol (for example), but make a point of going to your doctor regularly and establish a history of lowering your cholesterol, your life insurance company may be willing to lower your premium.

The Hunt For A Missing Life Insurance Policy

Uh-oh! You’re the beneficiary to a relative who just died, but their policy is nowhere to be found! What do you do?! Well, don’t panic, because if you find it in the near future, you will still be able to claim the death benefits. Simply follow the list Insurance.com has made for you on tips on what to do when a life insurance policy has come up missing:

1. Look through canceled checks or go to the relative’s bank and request copies of any old checks. When viewing them, see if there are any made out to life insurance companies.


2. Check with your relative’s lawyer, insurance agent or accountant and see what information they can give you on your relative’s finances.

3. Call their old employers and see if they bought into the company’s group life insurance

4. Call the Medical Information Bureau (MIB)—an organization that maintains a database showing if insurers requested your relative’s medical information. If your relative bought a life insurance policy within the past seven years, the MIB will more than likely have some kind of paper-trail to help you find it.

Naming a beneficiary
If you are making someone your beneficiary, here are a couple things you will want to do:

1. Be sure to provide your beneficiary with your life insurance policy details, such as policy number, insurance agent’s name, company phone number and email address.

2. Keep your records together. To make it easier on your beneficiary, be sure to keep all of your records (financial and medical) together in one place. This will help alleviate any panic or stress if your beneficiary needs to find something after you have passed.

Different kinds of policies

. Term policy—If your relative had a term life insurance policy, and they did not die after the policy expiration date, you will receive their death benefits. If they died after the expiration, you won’t receive anything.

. Permanent policy—If the policy was in force at the time of death, you will receive the death benefits. If the relative died a while ago, you will receive the death benefits plus the interest it had accrued from the date of death.

. Lapsed policy—depending on if your relative had a term life insurance policy or a permanent life insurance policy and if they stopped making payments and the policy lapsed, the insurance company would switch its status to either “extended term” or “reduced paid up”.


1. Extended term uses any built up cash value to buy a short-term life insurance policy. If this expires before the insured dies, the beneficiary gets nothing. If the insured dies before the policy expires, the beneficiary will collect the death benefits.

2. Reduced paid up is where the life insurance company reduces the death benefits, but keeps the policy in force.

If the policy lapses due to the death of the insured, the beneficiary will collect the full death benefits. Also, there is no time limit as to when the beneficiary can collect the death benefits; the only requirement is that the death certificate is presented to the insurance company to verify the insured’s death. If the beneficiary never comes forward, then no one receives the money.

Unreported death
If the policyholder dies and the insurance company isn’t informed, the policy will lapse. In this case, the life insurance company will send letters informing the insured that payment was not received and their policy may lapse if this continues. If there is still no response, the insurance company may initiate a search, but if no answer is found, the policy will automatically lapse due to delinquency of payment.

Unclaimed death benefits, are they gone forever?If a beneficiary doesn’t collect death benefits, and the life insurance company can’t find the beneficiary after a few years, the money is transferred back to the state where the life insurance policy was originally purchased from. The full amount must be turned over to the state comptroller department within three to five years of the insured death. There, it is put into a bank account and considered “unclaimed property”.

A database with the names and addresses of lost beneficiaries is located at the state comptroller’s office, and many times, they do try to find the beneficiaries to distribute the death benefits to. Depending on your state, you may be able to go online, look in the paper for any unclaimed death benefits, or call the state comptroller or treasurer for information.

It should be noted that if the life insurance company doesn’t know the insured has died, they are not required to turn the money over to the state. If the state doesn’t have a death benefits law in place, then the money will remain at the insurance agency and they can continue to search for the beneficiary. Also, it is very rare for money to be turned over to the state, because most insurance agencies have their own search techniques to find beneficiaries.

If you are interested in getting a life insurance quote, log on to Insurance.com. Here you will be able to evaluate multiple rates from best-in-class life insurance providers – helping you find the best life insurance coverage for you, while also giving you the peace of mind in knowing that your family will be safely covered in the future.

How Much Life Insurance Do You Need?

You might be asking yourself this question: "How much life insurance do I need?"
Some financial advisors will tell you to multiply your annual income by seven. Others will tell you to buy only enough life insurance to replace the income you are expected to make between now and retirement. Some might recommend you buy only enough life insurance to cover your present debts.
While you probably can do all of those calculations in a minute, they won't give you the right answer. Simply put, calculating your life insurance needs takes homework. It requires you to do an inventory of all of your finances, and to think long and hard about how your beneficiaries would maintain their lifestyles without you. You also must consider inflation and, if you have children, future college education costs.

What not to do
What's the wrong way to calculate how much life insurance you need? Here are some common but misguided methods.

1. Multiply your annual salary by seven or eight: While it’s a simple formula, it fails to take into account your individual needs and obligations. Life insurance experts say there’s a good chance you’ll buy too little or too much coverage, simply by using a formula such as this.

2. Calculate your "human life value:" This method gives you the income you will earn from your present age until your retirement age, assuming a rate of interest that represents salary increases throughout that period. The problem is it does not take into account what your beneficiary's specific needs will be. You also end up with a figure that requires you to buy a huge amount of life insurance, possibly more than you may need. "There's all sorts of landmines in this," says Michael Snowdon, an instructor at the College of Financial Planning in Denver. "When you calculate this way, you're working with broad brush strokes."

3. Cover your debts. This involves buying only enough life insurance to cover debts such as your mortgage, student loan bills, or outstanding car notes. This method does not consider any future debts or needs, such as childcare or college education costs.

A classic formula

Many experts say the best way to pinpoint a smart life insurance figure is through a needs analysis, which can be broken down into a simple formula: Short-term needs + long-term needs - resources = how much life insurance you need. Snowdon says this method is "probably the most accurate approach in what is an inaccurate and imprecise science."

Experts advise you do an analysis at least once every three years, or whenever you have had a major life change. For example, if you have a new baby, you have to recalculate college education needs and child-care costs. If you own a home, a mortgage is likely your biggest financial burden. Because your mortgage balance decreases with each payment, it's important to include those revised figures in your calculations.

Five steps to a needs analysis

Step 1
Add up all of your short-term needs. These can be placed into three categories: final expenses, outstanding debts and emergency expenses. Among final expenses are medical, hospital, and funeral expenses, attorney or executor fees, probate court costs (if you do not have a will), and any outstanding taxes that would need to be paid if you died. Among outstanding debts are credit card balances, auto loans, college loans, and all other outstanding bills. Emergency expenses should include a cash reserve for medical emergencies and repairs to your home or car.
Calculating final and emergency expenses can be complicated, because you don't have a crystal ball that tells you how much your medical or hospital expenses will be, or if you even will have any.

Step 2
Next, add up your long-term debts, which include your mortgage and college tuition.

Calculating an education fund is tricky because you have no idea where your children will be going to college. Perhaps the best method is to use the present average college cost in the United States and the number of years away your children are from entering college. The average college costs for the 2002-2003 school year were $4,081 annually for a public, four-year institution, and $18,273 annually for a private, four-year institution, according to The College Board.
The U.S. Department of Education reports college costs traditionally have risen at about 5 percent annually, so you need to figure out what the cost will be when your child goes to college. (To calculate what costs will be in the future, see the last section: “A must-know: the equation for the future value of money.” Also be sure to calculate what the entire education will cost while taking into account the increased costs each year.)

Step 3
Next, calculate family maintenance expenses. These include such necessities as childcare, food, clothing, utility bills, entertainment, travel, and transportation. Calculate this figure based on a year's worth of expenses, then multiply that times the number of years you want to provide this income. Once you've done that, add your short and long-term debts and your family maintenance expenses.

Step 4
Now that you've tallied all of your income needs, figure out what resources you have to meet them. To do this, add all available savings, stocks, bonds, mutual funds, existing life insurance (such as group life through your employer), and Social Security. You and your spouse can find out how much you'll get through the Social Security Administration (SSA) by visiting the SSA’s website, where you can get an estimate of how much you should have in Social Security benefits. Also add your present salary, and assume 5 percent compounded interest each year if you expect salary increases over time.

It's important to count only liquid assets (those that could be quickly converted to cash) among your resources. You shouldn't count items such as your home or automobile, because selling them for cash when you're gone would mean changing your family's lifestyle.

Step 5
Subtract your resources from your total expenses. The figure you get should represent the amount of life insurance you should buy.

Don't be daunted
Snowdon says the final figure that shows how much life insurance a person needs can be quite alarming. If you end up with an astronomical figure that requires a premium that is too high, he recommends you go through the analysis again and select areas for which you think you can allocate less money.

"Many people will look at the final figure and say, 'I can't do that,'" Snowdon says. "You have to look at it, figure out which is the most crucial, start making adjustments, and go from there."

A must-know: the equation for the future value of money

Calculating your life insurance needs will require two equations you may have picked up in Finance 101: the future and present value of money.

The future value of money equation tells you how much your money will be worth in a given number of years while earning a given rate of interest. This equation is essential if you are calculating how much money you'll need in the future because of inflation, or what your death benefit will be if you choose to invest the money at a given interest rate.

The present value of money equation tells you what your money is worth before it has been invested for a given number of years at a given rate of interest. This is important if you have an amount of money you need in the future, and you need to know how much life insurance coverage you should buy now.

If this sounds complex to you, don't fret. As long as you have a calculator (preferably a financial calculator, which is used by accountants and finance professionals), these equations are no sweat.
Here's how the future value of money equation works: Say that average college education costs are $20,000 annually for a private four-year institution, and you want to figure out how much it will cost in four years if college costs keep going up 5 percent per year. You would multiply 20,000 by 1.05 (1 represents the present cost, and .05 is 5 percent inflation) four times (or 1.05 to the fourth power).
So your equation would be this:
20,000 x (1.05)4 or20,000 x (1.05)(1.05)(1.05)(1.05)The answer is $24,310.13.
Courtesy of Insure.com

How to Buy Life Insurance

Buying life insurance is an easy way to protect your family after you're gone. If you know what to look for, you can get great coverage at a price you can afford.

Why buy life insurance?
Topping the list of reasons to buy life insurance is the financial protection life insurance offers. If you're single and just starting out, you may not need life insurance. But as you take on more responsibilities and your family grows, your need for life insurance increases. The proceeds from a life insurance policy can replace the income lost to your family upon your death. You might also want to buy life insurance to pay off debts and expenses, leave money to charity, and cover final and estate expenses.

Choose term or cash value
There are two basic types of life insurance: term life insurance, which provides life insurance coverage for a specified period of time (the term), and cash value (permanent) life insurance, which combines a death benefit with a cash value component. Cash value insurance offers lifetime protection, while term insurance may be the most affordable option if you're buying life insurance mainly for the financial protection it offers, and your need for life insurance is temporary (until your children leave the nest, for instance). Some term policies (called "convertible") will permit you to exchange the term life insurance policy for a permanent one at some point.

Decide how much coverage you'll need
The amount of life insurance protection you should buy depends on how much income your survivors will need, how much you own and owe, and the amount of other life insurance available to you. If you're married, both you and your spouse should consider buying life insurance. One of the easiest ways to estimate how much life insurance protection you should buy is to use a life insurance needs calculator.

Pick a number between 1 and 30
Term life insurance is usually offered for periods ranging from 1 to 30 years. Consider choosing a term that matches your need for life insurance protection. For instance, if your main reason for buying life insurance is to protect your 7-year-old twins until they're out of college, you'll want to buy a policy with a term of at least 15 years.

How much will it cost?
How much you pay for life insurance will depend on a number of risk factors, including your age, your health, whether you use tobacco, your family health history, and the type and amount of life insurance you're buying. Keep in mind that the premium you're quoted initially will increase later. For instance, when you buy term life insurance, rates are guaranteed only until the end of the term (annually for annual renewable term or at the end of a specified number of years for level term). While most life insurance policies can be renewed at the end of the term, you'll pay a higher premium for coverage.

Shop around
When comparing quotes for life insurance, make sure that the insurance coverage you're comparing is similar. And remember, any policy that you buy is only as good as the company that issues it. Find out what rating the company has received from major ratings services, such as A. M. Best or Standard & Poor's. These companies evaluate an insurer's financial condition and claims-paying ability. The company giving you a quote should provide you with this information. You can also contact your state's department of insurance to find out more about an insurer's record.

Submit an application
Once you're ready to purchase a life insurance policy, you'll fill out a life insurance application that contains questions about your current and past health history and lifestyle. You'll generally be required to take a medical exam, arranged and paid for by the insurance company. The answers you give on your application, along with the results from the medical exam and your past health history, will help the insurance company determine whether to offer you a policy, and if so, at what price.

Learn the lingo
Maybe a life insurance contract isn't as exciting as a best-selling novel, but read it anyway. Policy provisions, the amount of benefits, the premium, and other charges you'll pay will be listed along with other important information such as the beneficiaries you've named and the premium guarantee period. Make sure you understand everything in the policy. Under the laws of your state, you may have a "free look" period (typically at least 10 days) during which time you can cancel the policy without penalty.