If you're lucky, you'll get a life insurance quotation that you
are happy with, progress to application, and get yourself
insured within 48 hours at the original price quoted.
Unfortunately this isn't the case for 66% of applicants - who
face delays and loaded premiums.
So why is this happening? Well, life insurance companies provide
quotes based on the 'perfect person' - which basically means you
must be 45 or under and in excellent health, have no hereditary
illness in the family, work in an office and want no more than
£250,000 cover. If you fall outside these strict boundaries, you
can expect delays, and expense.
When you request an initial quote, you only have to provide a
few details, namely your age, sex and whether you smoke. The
insurer calculates how long you are likely to live, and uses
that prediction to provide a quotation. This is what is known as
their "Standard Terms".
If you like the quote and want to apply, you'll have to give
them a lot more information. You can either fill the form out
yourself or give the details over the phone, a service that many
online insurance companies offer. It speeds up the process, and
ensures that you don't miss any important details out. Failure
to include a detail that later on turns out to be important
could invalidate your claim. They will then send the completed
form for you to check and sign, so you need to be 100% sure that
you have not omitted any details.
The insurers then use the information on the application details
to make a more detailed analysis of your health and lifestyle,
to try and predict any future concerns. If you have health
problems of your own, you will instantly face loaded premiums,
but they also look at more insidious issues such as your weight,
alcohol and nicotine intake. Also if your father died of a
stroke, or your mother from breast cancer, this will have an
impact on their assessment of you.
Your lifestyle will also have a part to play. If you work in an
industry where accidents happen, such as construction or
farming, or if you have a dangerous hobby like paragliding or
mountain climbing, your premiums will feel the heat. They will
also ask if you regularly visit countries that have historically
represented health risks for visitors, like Africa and parts of
Asia. And even though the law doesn't allow discrimination
against same sex relations, the insurance companies will
invariably ask you to have a full medical examination before
agreeing to insure you.
Insurance companies have admitted that their list of questions
has grown somewhat in recent years, and continues to do so. They
say it's to reduce the number of claims they reject, but whilst
that may be partly true, the proportion of applicants facing
loaded premiums has increased at a noticeable rate. A few years
ago, it was more like 40% - but many of today's insurers are
loading premiums on 66% of applicants.
So just how much more will you have to pay? It's impossible to
say because it's based on individual circumstances, but here's
an example to help illustrate. A 40 year old woman suffering
from post-natal depression and receiving treatment for it was
recently faced with a 50% increase on an initial quotation of
£7.60, as was a woman whose mother had breast cancer. Overweight
people also face higher premiums ranging from 50% to 100%, and
in extreme cases - refusal.
So what can you do to avoid being charged these higher premiums?
There is nothing you can do per se, other than avoid the
insurance companies that give the cheapest initial quote. They
are the ones that are most likely to have very strict medical
criteria, because that's their way of keeping their quoted
prices at rock-bottom levels. Try a more expensive provider like
Friends Provident and you may find that they are more lenient -
in any case, it's worth a try!
If you pay over the odds, you will be doing yourself a great
disservice. Think about it, an extra £10 a month becomes an
extra £3,000 on a 25 year policy. If you don't have the time to
get quotes and apply to different life insurance companies, talk
to an online life insurance broker, they will be able to find a
way around your particular problem to get you the cheapest quote
possible. You will also benefit because of the competition on
the internet - this means extra reductions as online brokers cut
their commission.
Don't do all the hard work yourself - let the professionals do
it for you!
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