Are you a mum who’s decided you’d like to apply for life insurance?
If so, have a quick read of this blog. That way, you can discover exactly how to apply to ensure you get the right cover for you. And as you’ll see, application is a relatively painless three-step process…
Step one: Decide which is the right type of cover for you?
Before you apply for cover, there are a couple key questions you want to have in your head. First up, have you thought about whether you’d like fixed-term cover or whole of life cover? Secondly, are you looking for a single policy or a joint policy with your partner? Both of these factors will influence the cost of your cover and there are pros and cons for each. If you are yet to decide about these key considerations, I’d recommend you check out these two blog posts:
Step two: Get a quote
Once you’ve got an idea of the type of insurance that you’d prefer, the next step is to get some quotes. The life insurance industry is very competitive and there is a lot of choice out there for you. If you don’t fancy spending hours entering your details on tens of sites to find the best deal, use the free quote service at Life Insurance for Mums instead. Simply request a quote, and a trained advisor will call you back with a range of options. It’s a quick and easy way to whittle down your choices and avoid getting confused with the many options that are available.
Step three: Apply for cover
Once you’ve decided which policy is right for you, the final step is to apply. This is also a simple three-step process as follows:
1. Complete the Application form.
Firstly, you need to complete an application form. You can fill in the paper document yourself, although the easiest way is to do it over the telephone. You’ll need to provide personal details and the application will require you to declare any existing health issues, lifestyle choices (such as whether you smoke), and other risk factors (such as a love of extreme sports). This information is used to determine your individual risk level and the insurer is looking for indications that suggest there is an increased risk that you might claim. This means that the accuracy of the details you supply is important. If you fail to disclose information, your policy could be invalid and any claims refused.
2. Get a decision.
Next up, you’ll need to wait for a decision from your insurer. There are three main outcomes as follows:
a) Same day acceptance.
There are a couple variations of same day acceptance:
i. Accepted on standard rates: Where the insurer does not identify any additional risk, you’ll usually be offered life insurance cover on their standard rates. This means that there is no change to the original terms quoted.
ii. Loading/rating: Your individual circumstances may mean that you get accepted, but with a loading or rating. In this case, an extra premium will be added to your monthly payment to reflect the additional risk of a claim. This loading reflects the additional risk that you present and could be related to factors such as family history, an existing medical condition, a lifestyle choice, or your participation in a dangerous hobby/pursuit.
b) More information required.
In some cases, the insurer may require additional information from you before agreeing to offer insurance. This is usually due to something in your medical history. In this case, a medical report may be requested from your GP or a nurse may need to visit you to complete a health assessment in your home. If you are offered insurance, it’s likely you’ll be subject to “ratings”.
c) You are declined.
If your individual circumstances pose too great a risk, it is possible that your application will be declined altogether. To be fair, this is rare amongst young people. So if you do have a pre-existing condition or you’re ill, it’s still worth applying for a quote. Don’t assume you can’t get cover. What’s more, just because one insurer rejects you, this doesn’t mean that you won’t be able to get cover elsewhere.
Here’s what Sion John of Harris John Financial recommends if you have an existing medical condition that you believe will influence your life cover:
“An applicant who’s had previous health issues such as heart attack, stroke, cancer or a diagnoses such as diabetes should seek advice from a life insurance specialist familiar with the insurers underwriting processes. This is because ‘standard rates’ shown on comparison web sites etc. become irrelevant – the objective here would be to find the insurer who would look at your medical history most favourably with the lowest rating as opposed to the lowest standard quote.”
3. Get cover.
Same day acceptance means just that – you can get cover the same day.However, if your insurer has asked for more information, you’ll have to wait for the feedback from your GP or the nurse visit before cover is available. This may take a couple of weeks to arrange, but once the insurer receives the information that they require, a decision can be taken quickly and you will be informed of the outcome.
And once you’ve got your policy in place, you can relax knowing that should the worst happen, you’re covered.
What are loadings/ratings and how are they calculated?
Some mums are confused about insurance ratings – so let me take a few moments now to explain what they are…
Insurers have robust processes, which allow them to assess individual circumstances and situations to allow them to make a fair decision about whether to offer life cover and the premium you’ll need to pay.
A large percentage of young people will be offered standard rates. However, if your particular circumstances are deemed more “risky” (for example, there’s a family history of illness, you have an existing medical condition, or you’re currently ill or injured), it’s likely the standard rates will not apply. In this case, a rating (or loading) will be applied to your policy. In the majority of cases, ratings are added in the form of a percentage to reflect the extra mortality (EM) risk that your individual circumstances present. So for example, a rating of +32% EM means your premium will be an additional 32% of the standard premium. To give you an example of the scope of ratings, PruProtect’s range is between +27.5 – 440%.
So what do mums think about the potential of paying additional premiums? Here’s Emily’s view:
“There’s a history of cancer in my family on both my mother and father’s side which meant my life insurance and critical illness premiums were ‘rated’ so I pay around 30% more. When my son was born, I felt this made it more important to get my cover. I don’t mind paying a few pounds more and I’m glad I’ve got it sorted – especially because the cost of my premium is now fixed for a long time.”
What do you think?
In most cases, getting life insurance cover is very straightforward. A large majority of mums are covered on standard terms and the application process is quick and easy. But as you can see, existing medical conditions or a “riskier” family history can result in the addition of a rating or a request for additional medical information. And whilst this can delay the process of getting cover, this shouldn’t put you off. Just remember why you’re applying in the first place. Your kids deserve financial stability and security and life insurance is the best way of providing that for them if you can’t be there.
I hope this helps to demystify the application process. If you have any questions, please pop them in the comments below. And if you’d like us to help you get a quote, simply complete the contact form on our home page.
Disclaimer: You should always speak to your financial advisor before committing to life insurance to ensure that any policies you take out are right for your individual circumstances and are the most suitable for you and your family.