What must an insurance application contain?

If you’ve been shopping for life insurance and have chosen your policy type, amount and company, you’re ready for the life insurance application. It’s a long process with many important, detailed questions, but you can set yourself up for success by preparing information ahead of time.

To help everything go smoothly, here’s what you’ll want to know before you put pen to paper.

Life insurance medical and lifestyle questions

Your life insurance company wants to know how likely you are to die while you’re covered. To figure out that risk, it asks you a series of questions about your family’s health, your health and the activities you engage in.

The less healthy you are, the more the company is going to charge you for coverage. That can lead some applicants to stretch the truth on their life insurance applications, which ends up being a horrible idea.

Lying on your life insurance application can lead to a denial of your application or a denial of benefits later on. Policies typically start with a life insurance “contestability period,” which is a two-year span when, if you die, the insurance company can dive into the details of your application and see if you omitted anything or lied. If you did, the insurer will likely deny your claim.

Your family’s health history

Since certain diseases among family members can affect your life expectancy, the life insurance company will want to know whether your parents or siblings have been diagnosed with or treated for heart or kidney disease, stroke, diabetes, cancer or other conditions.

If they have, know their age at the onset of the condition and, if they are deceased, their age at death. Insurers are mainly looking for earlier onset diseases, so if your parents died at an older age, you won’t be penalized. For instance, an insurer may ask if your family members had heart disease or cancer before age 60 or 65, depending on the company.

Your medical history

Although you provided information about your health to get a quote, you’ll need to provide it again for your life insurance application. There’s no point in fudging here because your insurer will use your medical records and information from a company called MIB Group (formerly the Medical Information Bureau) to verify everything.

Life insurance companies use MIB because it collects health information from many providers all in one place. That information can help an insurance company determine how risky you are to insure.

MIB maintains a database of health conditions applicants have reported on applications made in the last seven years for individual life, health, long-term care and other insurance types. If you previously applied for a life insurance policy and stated that you had been treated for cancer and your new application doesn’t mention the cancer treatment, this will raise a red flag from MIB, and your life insurer will likely want to investigate further.

Not every insurer feeds data to MIB. You can get your own MIB file to check its accuracy.

Have the name, address and phone number of your primary physician and the physician you last saw, along with the date of your last visit.

Be prepared to report the date, symptoms, diagnosis and treatment for a wide variety of medical conditions. The list will be very long and includes:

• High blood pressure.

• High cholesterol.

• Chest pain.

• Ulcer.

• Anemia.

• Immune deficiency.

• Leukemia.

• Cancer, tumor and melanoma.

• Diabetes.

• Asthma.

• Brain disorders (even chronic headaches).

• Depression, anxiety and suicidal thoughts.

• Anorexia or bulimia.

• Obsessive-compulsive disorder.

• Problems with eyes, ears, nose or throat.

Current medications, drugs and alcohol

The life insurance application will ask about past use of illegal drugs, current alcohol consumption and prescription medications, and whether you’ve ever been advised to seek addiction treatment.

Lifestyle history

The life insurance company will typically ask if you have any criminal convictions or a history of a suspended driver’s license, moving violations or DUI. If you do, know the dates — insurers are generally only interested in events for a certain time period, such as the last five years.

Future plans for risky activities

Piloting a plane, rock climbing, ice climbing, hang gliding, scuba diving, skydiving and car racing can all increase your chance of death, so the life insurance application will ask if you have participated or intend to participate in those. Risky hobbies will boost your life insurance premiums or may result in a denial.

The application may also ask if you intend to travel outside the United States in the next year or two.

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Nonmedical life insurance questions

Your life insurance company also needs to know a bunch of practical and logistical information when you apply for a policy. These questions don’t address the risk you present to a company, but without the answers, your life insurance wouldn’t work.

Life insurance beneficiaries

When you buy a policy, you’ll designate your life insurance beneficiaries on the application. Beneficiaries are the people who receive any benefits from the insurance policy if you die while it’s in force. You can assign different percentages of the benefit to each of your beneficiaries. For instance, you could assign 70% to your spouse and 30% to your brother.

You should also be prepared to designate a secondary beneficiary. This is the person who receives the benefit if the primary beneficiary dies before you do.

Be sure you have your beneficiaries' Social Security numbers and dates of birth.

Payment frequency

The application will likely ask how often you want to be billed. Common choices are single payment (meaning one large lump sum), annually, semi-annually, quarterly and monthly.

Other life insurance policies

The life insurance company will want to know if you have other life insurance applications pending, and for how much insurance. If you seem to be applying for more life insurance than your situation calls for, the company will likely ask why.

The application will also ask how much individual life insurance you already have in place.

Sign your name

Why does signing your name deserve special attention? Because the life insurance application is a legal document. It can be used against you if you have intentionally misreported anything, which the insurer would consider fraud.

The insurance company is going to verify everything to the extent possible, which could include pulling your:

• Medical records.

• Prescription drug record.

• DMV report.

• MIB report.

• Credit history (to look for bankruptcy).

Term life vs. permanent life applications

No matter what type of insurance you purchase, you’ll need to follow all of the steps listed above. However, there are some differences in the application processes for term life insurance and permanent life insurance, such as whole life.

Because term life insurance has no cash account (the part of a permanent policy that gains value over time), you won’t need to answer any financial questions beyond who gets the benefit of your policy when you die.

Permanent policies are more complex financial tools. They change in value over time, either at a fixed rate or through investments that can rise or fall. As a result, when you’re applying for a permanent life insurance policy, you’ll need to answer some additional financial questions.

Depending on the product you’re applying for, you’ll need to choose ways to take loans from your cash account, decide whether to have your death benefit include the cash account, choose how to divide premium payments among investment accounts or certify that your seller presented a prospectus. There may be additional questions regarding your financial fitness, as well.

Life insurance medical exam

After your application is submitted, you may need a life insurance medical exam to qualify for coverage or to get the best rates.

You’ll be contacted by a paramedical examiner to schedule an exam if your policy application requires one. You’ll arrange for a convenient time and place for the exam — for example, at home in the morning.

The exam generally includes height, weight, urine and blood samples and a review of all the medical questions again. You’ll be an expert on your own medical history when this is over.

Not all life insurance requires a medical exam. Simplified issue and guaranteed issue life insurance both attempt to skip the exam by using more health data or by charging higher premiums for coverage than traditional life insurers.

After the application

How long it takes to issue your policy will depend on how quickly the insurer can get your medical records and verify your application information. If the insurer has any follow-up questions, that will extend the process. According to Life Happens, an educational nonprofit supported by insurers and brokers, the review of your application typically takes a few weeks.

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