7 Reasons You Should Consider Life Insurance Prequalification

When To Buy Insurance

Have you considered life insurance prequalification? The following is a guest post by KJ Price. KJ Prince is an insurance agent and the founder of Insurance Engine. When he’s not writing about insurance he enjoys technology, design, CrossFit, and fly fishing. If you’d like to submit a guest post on Money Q&A, please check out the site’s guest posting guidelines.

Life insurance prequalification is a process top-notch life insurance brokers utilize for uncovering important information about life insurance applicants. Prequalified life insurance quotes are not guesses or estimates, they are accurate rate quotes based on your actual life insurance risk profile.

In this article we’ll cover 7 reasons you should consider life insurance prequalification and how the process works. By the end of the article you’ll understand why you should get prequalified and how the prequalification process works.

You Should Consider Life Insurance Prequalification

So let’s jump right into the first reason you should get prequalified….

Life Insurance Prequalification is Usually Free

This is a no-brainer folks. Life insurance prequalification is usually free and without obligation. If your broker asks you for a fee to pre-qualify you, you should find a new broker.

The best life brokers utilize prequalification as part of their normal process. But not all insurance brokers are created equal. If you’re working with an impersonal, call-center brokerage then they probably won’t bother going through the lengthy (and costly) prequalification process.

These types of insurance brokerages are focused on getting you in and out of their agency as soon as possible. In fact, we’ve heard that some agencies monitor how long their agents spend on the phone with each client and incentivize them to spend LESS time with you! Therefore, they skip some of the most important parts of the prequalification process, which we’ll explain later.  

A Great Way to Find Affordable Rates & Preview Insurance Quotes

Prequalification is a just a name for the thorough process the best life insurance agents use to evaluate your life insurance application, uncover your true needs, and gather information that will allow the agent to select the right life insurance companies to shop your policy.  

The prequalification process is the best way to serve the customer and meet their needs. During the prequalification process important information is uncovered that will allow your broker to act in your best interest and select the right insurance carriers to submit your application to.

Seeking Prequalification for Impaired Risks

One of the more common questions we get is “how do life insurance companies check medical records?” That’s an important question that everyone looking to buy life insurance should know.

The fact is life insurance companies utilize something called the Medical Information Bureau (MIB) to find out information about your medical history. If you suffer from an impaired risk you should consider getting prequalified before submitting a formal life insurance application.   

How to Avoid Getting “Blacklisted” By Life Insurance Companies

The prequalification process is the best way to avoid getting “blacklisted” by life insurance carriers. Prequalification protects your life insurance application history because you don’t submit a formal application.

Insurance companies have more information about you than your realize. Concealing or withholding information could land you on a list of bad faith insurance applicants—and insurance companies share information about you and your application history to better their odds of catching dishonest applicants.

That’s because life insurance companies are financial companies—and financial companies use a network of data providers to collect, organize and share information about consumers and businesses. A good example is credit card companies—these companies all know if you’ve ever been turned down for a credit card.

And, life insurance companies are no different. If you’ve been denied life insurance in the past, your new application could be impacted.

The bottom line is: If you have a poor life insurance application history it will be hard to obtain a favorable rate. Prequalification helps you avoid this by anonymously submitting information to insurance company underwriters before submitting an official life insurance application.

Liars Insurance: Why You Should Never Lie on Your Life Insurance Application

Ever wonder what happens if you lie on a life insurance application? So does everyone else. But listen up—you should never lie on your life insurance application, and here’s why.

First and foremost if your lie is uncovered at the time of your death the life insurance company may deny your beneficiary’s claim–that is they won’t pay the death benefit. Now let’s be fair, this is the worst possible outcome but it happens.

If you deceive the life insurance company, they will contest the payment of benefits. And, you’ll have paid the premium for nothing.

Now that the worse case scenario is out of the way—here’s a few more reasons not to lie on your life application.

The company may investigate and decline your application. Remember what we said about having blemishes on your application history and getting “blacklisted.” Well, if a life insurance investigates your applications and it turns out you lied…Then you’ve just been “blacklisted.”

That information will follow you around forever and underwriters will be skeptical of future applications you submit—making it hard to get an affordable policy.

You may be hit with high premiums or a surcharge. Maybe you told a little white lie, or left some pertinent information off your application. Well if the insurance underwriters take a closer look and find out you’ve misrepresented yourself you’re in trouble. They’ll likely re-rate your application, adding a surcharge or upping the rate to compensate for the new found information.

How Does the Life Insurance Prequalification Process Work

Every broker has a different process. So we asked the folks over at Big Lou Insurance to explain their pre-qualification process.  Big Lou told us that their process is designed to accomplish the following:

  1. Avoid issues with life insurance underwriting late in the process (EG. avoid the bait and switch where premiums increase right before you purchase the policy). 
  2. Give you an accurate idea of what your actual policy premium will be when the policy is issued.  
  3. Help you avoid being “blacklisted” by insurance carriers and having a negative application history. 
  4. Help you identify and select the perfect life insurance companies to submit a formal application to. 
  5. Uncover any information that may make it challenging to secure an affordable policy.

Big Lou’s life insurance pre-qual process has the following 3 steps:

  1. We have a lengthy discussion about your life, health condition, and unique circumstances. If you suffer from one of the many impaired risks we specialize in we’ll cover all the important issues related to your unique condition.  
  2. You sign a HIPPA release form so we can communicate with your doctors and request medical records on your behalf. We pay for any fees associated with obtaining your medical records.
  3. We review all the relevant information with you and get a holistic understanding of your health condition and formulate a plan to get you an affordable life insurance policy in a timely manner. 

While the life insurance prequalification process is a lot more time consuming than your typical life insurance application process, the benefits for consumers are obvious.

We recommend you do your due diligence before applying for life insurance and consider going the prequalification route. And, be sure to ask your broker about their prequalification process before submitting an application.

KJ Prince is an insurance agent and the founder of Insurance Engine. When he’s not writing about insurance he enjoys technology, design, CrossFit, and fly fishing. Be sure to follow KJ on Twitter, Facebook, and LinkedIn

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