The phrase “Hurry up and wait” could be applied to the process of buying life insurance. An agent is usually quick to engage in conversation with you to see what you’re looking for, what you need, and if you can pay for it.
Many times, they can instantly get you a proposal or quote, and just as quickly have your application completed and sent into the home office for approval. Sounds simple, right?
Jump ahead to these sections:
- Average Time It Takes to Get Approved for Life Insurance
- What's the Life Insurance Sign Up and Approval Process?
- Is There Anything That Speeds Up or Slows Down the Approval Process?
- Is There a Waiting Period for Your Life Insurance Policy to Start?
Why does approval sometimes happen so quickly, while other times it can seem like an eternity? Below, we look at the process starting from when the agent arrives at your door for your initial meeting until they bring you your approved policy.
Average Time It Takes to Get Approved for Life Insurance
The average time it takes to get approved for a life insurance policy depends upon a number of factors. These can include the following:
- How quickly the agent submits the application to the home office
- How quickly the agent schedules the medical exam (if necessary)
- If the applicant has to reschedule the exam
- How soon the exam gets to the underwriter (the person who approves or declines the application)
- If medical records are required from the applicant’s doctor or specialist
- How long it takes for the doctor’s office to provide those records
- How long it takes for the underwriter to review all of the necessary documents needed to make a decision
As you can see, there are numerous steps involved, with quite a few people being part of the process. So, how long does all of this take? It depends. If a medical exam is required and doctor’s records are needed for an application, it can take anywhere between 48 hours to six weeks or longer.
If the face amount of the policy (death benefit) is under $100,000 and the applicant answers all of the health questions on the applications favorably, some companies can issue a policy of this amount in less than a week.
On the other hand, if the face amount is $1,000,000, it can be longer. Specifically, if the applicant indicates pre-existing medical conditions on the application and a medical exam and/or doctor’s records are required, it can take six weeks or longer.
Some insurance companies are notoriously slow with their underwriting process before they make a decision, and this can be frustrating to all parties involved. That said, you want to be wary of companies that approve almost instantly upon receiving your application.
Sometimes these fast-moving companies don’t underwrite the policy until a claim is filed after the insured dies. These companies save a lot of money in up-front costs by not fully underwriting a policy. Unfortunately, this can also cause big delays in getting a claim paid while they’re doing the underwriting after the claim is filed.
It’s important to ask upfront at what point the insurance company does their underwriting. Some companies that do it later have been known to be among the most difficult to work with when trying to get your money.
What’s the Life Insurance Sign Up and Approval Process?
If you can’t tell already, buying life insurance can get complicated at times. A lot of money is involved. Highly rated and reputable companies won’t rush the process, but they won’t dawdle either. After all, time is money as far as everyone is concerned.
Step 1: Select your company
Like you do with every major purchase you make, it’s always good to shop around and pick the company you have the most confidence in. As life insurance is not something you buy very often and not the hottest topic to talk about with friends and family, you may feel like you’re all alone when you begin the process.
You can ask for a referral from people you know, and if they’ve purchased life insurance, they’ll probably be happy to recommend the company they bought from to you. This is a good starting point, but you still have to do your homework on the company once you get the name.
The best way to do this is by checking the company’s ratings with the three major rating sources:
- A.M. Best & Company
- Standard and Poor’s
These ratings will tell you about the financial stability of the company and its claims-paying ability.
Compare different companies and their ratings before you investigate what they have to offer. There’s no reason not to talk with two or three and do some comparison shopping.
Step 2: Meet with an agent
This may be the most dreaded step in the life insurance buying process. Some people liken it to buying a car or having a root canal performed. It’s not fun, but it’s necessary.
Remember to relax, as a professional agent will be courteous, knowledgeable, and avoid using high-pressure tactics to get you to buy on the spot.
The right agent(s) will conduct a thorough fact-finding session with you. They should take the time to get to know you and what your personal needs are before they ever make a recommendation of what you need.
Consider staying away from doing business with an agent that tells you what you need instead of discovering what you need. A good agent can help you with finding the best life insurance policy and determining how much life insurance you may need.
If all goes well and you’re ready to move forward, you may end up filling out an application. In addition to all of the usual information (name, address, phone number), you’ll be asked a series of questions about your health history. It’s important that you answer these questions accurately and truthfully since any misrepresentations can result in your claim being denied down the road.
Step 3: The medical exam (if needed)
Depending upon your answers to the medical questions in the application and the face amount of the policy, you may be required to have someone give you a medical examination if you want to be issued a policy. Don’t fear, however - it’s not invasive and is relatively painless.
The exam is pretty straightforward. An individual trained in giving these exams will come to your home or office and do the following:
- Ask you many more detailed questions about your health history
- Check your blood pressure and pulse rate
- Check your height and weight
- Collect a blood and urine sample
It’s not a lot of fun, but it takes less than an hour and it can be good for you to know what your vitals are and get some lab work done for free.
Step 4: Underwriting
Once all of the preliminary work has been done in steps one through three, all of your information will go to a person called an “underwriter.” The underwriter’s job is simple; they make sure—based on the information provided—that you are an acceptable risk to the insurance company and that there’s a very good chance that their company will profit from doing business with you.
An experienced underwriter can look at your data and accurately determine if the company should take you on as a risk and issue you a policy. Sometimes they’ll issue you a policy at their standard rates because of your good health, or they may charge you a higher rate because of something in your health history that makes you a higher risk for them.
Unfortunately, you’ll be declined for coverage if the underwriter decides it’s not in the best interests of the insurance company to approve your application.
Step 5: Policy delivery
Last, but not least, your agent will deliver your policy to you. They should take the time to explain all of the policy provisions with you and let you know how you can receive any service as a policyholder if you should ever need it.
Is There Anything That Speeds Up or Slows Down the Approval Process?
Yes, you can impact the speed of the approval process. Two things in particular can determine how quickly you receive an approval: the completion of your medical exam and how soon your doctor can send your medical records to the underwriting department.
Is There a Waiting Period for Your Life Insurance Policy to Start?
After all of that time invested getting approved, it can hopefully go downhill from here. As long as you submitted the right amount of premium (payment) with your application, you’ll be covered as soon as your application has been approved. At that point, the insurance company has an obligation to honor its commitment to you and your family.
Life Insurance Is for the Living
It is good to invest in a life insurance policy, as you can leave money behind that can pay off a mortgage, put a child through college, and let a family maintain their standard of living. Don’t be discouraged by a lengthy approval process – being able to care for your family even after your death is worth the wait.