Getting Life Insurance If You Are Not So Healthy
Life insurance is not a subject that people regularly talk about like what restaurant should they go to tonight or who won the last football game. The fact is, though, it is important and very necessary when others depend on your ability to produce and income or if your premature death would significantly affect the operation of a business.
What should you consider before applying?
First and foremost, do you actually need the insurance? Is there a better way to cover any liability you or your estate may be responsible for? Some of the most common options to life insurance are the use of liquid assets. Another is to eliminate or greatly reduce any liability someone who depends on you may need to address upon your death. A liability could include generating a replacement income, paying off debts, buying out a business partner and so on. Sometimes, by rearranging assets or using trusts, the need for insurance may be eliminated or, at least, greatly reduced. We suggest that you speak to your legal and tax advisor before applying for any life insurance.
If the need for life insurance exists, look at your finances and talk to family members and/or business partners and trusted advisors to determine how much coverage you will need. The length of your life insurance policy will also be a factor. Should you do a 10 year term insurance plan or longer? Should you have a lifetime coverage plan such as a whole life insurance plan? How much can you budget to meet the need? You would not want to overbudget and have to cancel the insurance shortly after it has been placed in force. You may need to start small and build up from there.
Should you go the more complicated complete underwriting route or use simplified underwriting?
That will greatly depend on two main factors. What are your health issues and how much coverage do you need? Let's look at the second factor first. If your need is very small such as covering final or burial expenses, then a no exam, simplified issue life insurance plan may be the best choice. If your need is larger such as $100,000 and up then a full underwriting plan that will likely require an exam is most likely your best choice. A competent insurance advisor should be able to guide you.
Now, about your health history. If you have been declined for life insurance by several insurance companies because your health is really not the best then your only choice may be to apply for a simplified issue insurance plan. Some insurance companies may even offer life insurance plans that do not even require that you answer any health questions on the application. If your health is generally OK and you have a good history of control and maintenance, then a full underwriting plan is likely to be your best choice (unless your need for coverage is small). In all cases, make sure to answer all questions on the application fully and honestly.
What if my need is for a large amount of coverage and my health is not that great?
In situations where your need for life insurance is large but the insurance companies offering full underwriting plans decline you, then you may need to "stack" simplified issue policies. This process requires that you secure several insurance policies to cover your total need. In other words, if you need $100,000 in life insurance, you may want to apply to three or more companies each offering a portion of total life insurance need ($25,000+$35,000+$15,000+$25,000 for a total of $100,000). It is important to note that, if requested on the application, you must notify each insurance company that you are applying to several companies and of the total amount you
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