Life insurance applicants who are lucky can be covered within 48 hours and at the quoted rate, but two out of three applicants will have to wait and may have to pay more.
Who are the lucky people, then? Basically, you'll need to be as healthy as a flea, have no history of serious illness in your family, be under 45, work in an office, and be looking for less than GBP250,000 in coverage. There will be some trouble for everyone else.
When a life insurance company gives you an initial quote, all they know about you is your age, sex, and whether or not you smoke. They use this information to make an initial guess about how long you're likely to live and then give you an initial quote. "Standard Terms" is what they call it.
If you want to move forward with your application, you'll have to fill out a long form. This isn't as hard as it might seem because most online companies take your information over the phone and send you a copy of the completed application to look over. But there are a lot of questions, and if you miss something that turns out to be important later, your insurance may not cover you. So be careful and pay attention!
The insurance company looks at your application to see if there are any signs that your health or way of life might be a problem now or in the future. Aside from the obvious questions that reveal health problems, they also look at your weight, how much alcohol and tobacco you use, and any health problems you might have gotten from your parents. So if your father died of a heart attack or your mother died of breast cancer, they'll be worried.
Then there's the way you live. If you work in a job where accidents happen, like construction, or if you do any kind of dangerous sport or fly, your premium may go up. They will even want to know if you often go to countries that are known to be dangerous for your health. Even though it's against the law to treat same-sex couples differently, insurance companies almost always make these applicants get a medical.
Insurance companies don't hide the fact that the number of questions they ask is going up. They say it's to cut down on how many claims they turn down. Even though that may be partly true, the trend has also led to a rise in the number of people whose premiums are raised after they apply. A few years ago, it was closer to 40 percent, but now it's almost 66 percent for some insurers.
How much might you have to pay more? It's kind of like asking how long a piece of string is. But to give you an idea, a 40-year-old woman who was being treated for postpartum depression was recently told that her initial quote of GBP7.60 would go up by 50%. A 50% loading was also put on a woman whose mother had breast cancer. People who are very overweight can also get loads of 50 to 100 percent or even be turned away.
What can you do when you have a load? It's important to know that insurance companies that give the cheapest initial quote are likely to have very strict medical requirements. So, they can keep the prices they quote low. So, if you have a loading, the best thing to do is shop around. Try one of the more expensive providers, like Friends Provident, who are sometimes a little more flexible.
Even though this may sound too complicated, keep in mind that an extra GBP10 a month on a 25-year policy costs you an extra GBP3,000 over time. Talk to an online life insurance broker if you don't have the experience or time to do this yourself.
There is a lot of competition on the Internet, so most online brokers will cut their commission to lower your premium. Their systems are also good at finding other providers when there are problems with loading. So make things easy. Let the online broker do all the hard work and let your fingers do the walking.
