What Personal Information is Required When You Buy Life Insurance?
When you apply for life insurance, you are required to provide quite a bit of personal information. While you are filling out the application, you might find yourself asking questions like “why do they need to know my social security number?” or “what does my driving record have to do with life insurance?”. As you can understand, the life insurance company is taking a risk whenever it provides coverage, so it will want to make sure that it has as much information as possible on you before it makes a decision on your health risk rating. This post will discuss the information a life insurance company will need from you in order to process a fully underwritten application and explain why certain personal information is needed.
Personal Information – The first part of a life insurance application focuses on personal information. Obviously, the life insurance company will need basic information such as your name, address, phone number, date of birth, state/country of birth, citizenship, marital status, occupation (including details of job duties and salary), net worth, driver’s license number and social security number. Most applicants don’t have an issue divulging simple contact information, but usually start asking questions when it comes to giving up more personal information like social security number, driver’s license number and financial information. So why does an insurance company need such personal information?
Social Security Number – Some people might be hesitant to give their social security number, but your social security number needed for a few reasons. One, it is used to confirm your identity. Two, it is also used as an important identification marker needed to order your medical records if necessary and to look up your records in the Medical Information Bureau (MIB). Three, it is also needed if you pass away, which must be reported to the IRS for tax purposes.
Driver’s License Number – Your driver’s license number is needed so that the life insurance company can look up your motor vehicle records. On another part of the application that asks about your non-medical history, you will be asked about your recent driving record. It will include questions about any moving violations, DUI’s or license suspensions. The life insurance company will use your driver’s license number to verify the answers on your application. Your driving record is an important factor in determining your risk classification when it comes to underwriting.
Financial Information – Your financial information is another important but sensitive piece of information that is needed by the life insurance company. You will be asked your salary and net worth. Your salary is needed so that the life insurance company can justify the amount of insurance you are requesting since most life insurance is purchased to replace the salary of a breadwinner should they pass away. This is determined by using a multiple of your income based on your age. Younger applicants will have a higher multiple. For instance, if you are 35 and make $50,000 per year, the insurance company might cap your coverage amount at 30x your income or $1,500,000 of coverage. If you are 60, the life insurance company may cap you at 15X your income. The insurance company wants to make sure that you’re not over insuring yourself. Your net worth is also taken into consideration in determining coverage amounts as well, but not as much as income.
Other Information – Along with the personal information listed above, you will be required to answer other questions on the application before it is submitted. Here are some other pieces of information that will be required.
Type of Insurance – Obviously, the life insurance company will want to know what type of policy you are applying for as well as the length and amount of coverage. The amount of coverage will determine what information will be required for underwriting in terms of the paramedical exam. For instance, policies with larger face amounts will require more exam requirements than policies with smaller ones.
Beneficiary Information – Your beneficiary designation will determine who will get the death benefit if you die while the policy is in force. You should choose your beneficiaries very carefully and be as specific as possible when naming them. You should also choose a contingent beneficiary as well. You can read more about choosing your beneficiaries here.
Other Insurance In Force – The insurance company will want to know if you have any other life insurance coverage in force. It will ask this for a couple of reasons. One, it will use this information to determine if you are over insuring yourself. Two, it will ask if you are going to replace this coverage with the new coverage you are applying for. If you are going to replace the coverage, replacement forms will need to be filled out.
Lifestyle Questions – Your lifestyle will play an important role in your risk classification. The insurance company will ask questions about tobacco use, drug use, alcohol consumption, if you’ve had any felony or misdemeanor charges, your recent driving history and bankruptcy history. It will also want to know if you have any hobbies that might be considered high risk such as piloting a plane or mountain climbing (read about high risk hobbies here) or if you plan to travel to or live in any areas of the world that are considered dangerous (read more about high risk travel here).
Health Questions – Your overall health will have the biggest impact on the health rating you receive from the insurance company. The insurance company will want to know your height and weight to determine where you fit in to its build chart to help determine your health rating. It will also want to know information such as the name and address of your primary physician, the last time you saw a doctor and why, family medical history (have any of your parents or siblings had or passed away from cancer or heart disease), and if you have been diagnosed with any medical condition from high blood pressure to more serious impairments like cancer and everything in between. It will also ask about any medications you take as well as doses and frequency. If you answer “yes” to any of the medical questions, you will have to provide an explanation of your health issue and explain when you were diagnosed and treatment you received.
Release of Health Related Information – You must also sign a document that allows the insurance company access to your medical information if needed. This is important if you have health issues and the life insurance company needs to look at your medical records in order to make a decision on your health rating.
Consent for Aids Related Blood Testing – You will also have to sign a consent form that allows the insurance company to test your blood sample for the HIV virus. If you test positive, you have a multiple options as to how you will be notified.
Paramedical Exam – Once the application is completed, you will have to schedule a paramedical exam that you can take at your home. The requirements of the exam will depend on the size of the policy. Your agent will be able to explain the exact requirements before you take the exam.
Conclusion – As you can see, life insurance companies are very thorough when determining your health rating on a fully underwritten policy. In order for the life insurance company to make the most accurate decision on your health rating, it will need to know all of the information mentioned above. This post was meant to set expectations for you as an applicant as to what information is required when filling out an application. If you need life insurance, give us a call at (888) 687-9444. We will help you determine how much coverage you need, shop your coverage to over 40 companies to get you the best rate and walk you through the application process and paramedical exam to give you the best overall experience possible.
Archstone Insurance Services, LLC is an independent agency that shops over 40 of the top life insurance carriers to provide huge savings on life insurance coverage for our clients. We are happy to answer any questions you might have about any of the insurance products we offer, your planning needs or your existing coverage. Feel free to call us directly at (888) 687-9444 or email us at info@archstoneagency.com. You can also visit our website at www.archstoneinsurance.com.
