Having life insurance can be incredibly beneficial. If you pass away unexpectedly, life insurance offers financial protection for your loved ones.
Before you can purchase life insurance, however, you need to be approved. Life insurance companies have a series of requirements you must meet for coverage. Learn more about the eligibility criteria for life insurance and how to improve your chances of approval.
In this guide:
- What are the basic life insurance eligibility requirements?
- What can disqualify your life insurance eligibility?
- Applying for life insurance
- How your life insurance rate is determined
- How to improve your life insurance rate and eligibility
What are the basic life insurance eligibility requirements?
Not everyone is eligible for life insurance. Life insurance companies look at a variety of criteria to determine your eligibility. The main life insurance eligibility criteria include:
- Age: Life insurance companies usually stop issuing new insurance policies at a certain age. For example, seniors may only be able to purchase coverage until age 80. The maximum age limit depends on the insurance company.
- Health: Life insurance companies look for applicants in good overall health. If you have pre-existing conditions or a history of serious medical issues, like heart disease, it’s possible that you won’t be approved for coverage.
- Lifestyle factors: To get life insurance, you must also have healthy lifestyle habits. For example, you have a better chance of approval if you don’t smoke, use drugs, or engage in risky activities like skydiving.
What can disqualify your life insurance eligibility?
While getting approved for life insurance isn’t necessarily difficult, various factors can disqualify you from getting coverage. Here are some common reasons for disqualification:
- Pre-existing conditions: If you have pre-existing health conditions, such as cancer, obesity, diabetes, and even serious mental health disorders, like clinical anxiety or depression, you might not be approved for life insurance.
- Smoking: Getting life insurance as a smoker is not impossible, but approval can be more difficult. If you find a life insurance company to sell you a policy, you can expect to pay a higher premium.
- High-risk occupation: If you have a risky job, like a construction worker, window washer, or rock climbing guide, you could be disqualified from life insurance.
- Poor lifestyle habits: People who smoke nicotine or marijuana, use recreational drugs, or drink alcohol in large quantities might be denied life insurance.
- Lying on your application: If you provide false information on your life insurance application, it’s considered fraud. If the insurance company finds out, your application will get denied, and you may have trouble finding another company to insure you.
- Driving record: If you have a complicated driving record with a history of at-fault accidents or serious violations, like driving under the influence, you may not qualify for life insurance.
- Criminal record: Most life insurance applications will ask you to disclose information about your criminal record. If you are being tried for a felony or are currently incarcerated, it’s unlikely that you’ll be approved for life insurance.
Applying for life insurance
A life insurance application is a multi-step process, and it’s helpful to understand each step and what to expect. Here’s a brief overview of how to apply for a life insurance policy.
- Complete an application
- Undergo a medical exam
- An underwriter reviews your application and exam results
- You are approved or denied
Complete an application
The first step is to complete your life insurance application. Many life insurance companies allow you to apply online. Otherwise, you can apply over the phone with an agent or submit a physical application in the mail.
The application will ask you to submit information about yourself, your lifestyle, and your overall health. The life insurance company will inquire about items such as:
- Height and weight
- Current medical conditions
- Past medical conditions and surgeries
- Medical history of immediate family members
- Lifestyle habits and activities
- Drug and alcohol use
- Financial information, including your annual income and net worth
- Criminal record
The life insurance company uses this information to determine your eligibility and calculate your premium. Answer the questions truthfully, remember. Otherwise, you are committing insurance fraud.
Undergo a medical exam
Depending on your medical history and the type of life insurance you’re applying for, a medical exam may be required. The life insurance medical exam is similar to an annual physical with your primary care doctor.
Typically, a doctor from the life insurance company or a third-party medical provider performs a physical exam. The doctor will check your height, weight, blood pressure, and heart rate. A urine sample, nicotine test, blood sample, and an electrocardiogram (EKG) may also be required.
If you’ve had genetic testing, you can submit the results to the doctor performing your medical exam. The underwriter might review the test results, but it likely won’t impact your eligibility or premium.
You can expect a life insurance medical exam to take no longer than 45 minutes. Typically, you get to choose where the medical exam takes place. Most doctors can perform the exam at your home, at your workplace, or at the doctor’s office.
An underwriter reviews your application and exam results
Once you’ve completed the medical exam, an underwriter from the life insurance company will review your application and exam results. During this stage, the underwriter does a couple of things:
Looks for inconsistencies between your application and your exam
For example, if you reported normal blood pressure on your application, but your medical exam found your blood pressure to be high, you might pay a higher premium.
Or, if you didn’t disclose recreational drug use on your application but certain drugs were detected in your blood, that could affect your approval.
Determines your life expectancy
Life insurance companies use a series of risk classifications and mortality tables to calculate your life expectancy. This formula determines your premium and your coverage amount.
The time it takes for the underwriter to review your application and exam results depends on the insurance company—it can range from a few days to several weeks.
You are approved or denied
The final step in the life insurance application process is finding out whether you were approved for coverage or denied.
The company will share your approved coverage amounts and monthly premium if you are approved. If you’re happy with those figures, you will sign a life insurance contract. Once the documents are signed and you pay the initial premium, your coverage takes effect.
If your application gets denied, you can do a few things:
- Change what disqualified you. An agent or the underwriter should contact you to explain why you were denied coverage. Discuss how to be approved in the future. This might include quitting smoking, reducing alcohol intake, or working with your doctor to manage a pre-existing condition.
- Reapply in six months. If you are denied for health or lifestyle reasons, it’s recommended to wait at least six months before applying for life insurance again. This gives you enough time to make meaningful changes that could improve your chances of approval.
- Consider a policy that isn’t medically underwritten. Final expense life insurance does not collect any information about your health and does not require a medical exam. Almost everyone gets approved, but the maximum coverage limits are very low.
How your life insurance rate is determined
Life insurance rates are determined based on your application responses and medical exam results. Everything from your height and weight to your criminal record and activities can affect your premium positively or negatively.
Ultimately, your life insurance premium is based on your expected mortality. If the underwriter determines you’re healthy and have a low risk of premature death, you generally pay a lower premium.
If the underwriter believes that your health, profession, lifestyle, and other factors could contribute to an early or unexpected death, you could pay a higher rate for coverage.
Calculating expected mortality is not subjective, though. Underwriters use mortality tables and other tools to estimate your life expectancy and determine how much the insurer might have to pay in claims. They also use the following risk classifications:
- Preferred plus: Excellent health. The individual has a healthy weight, no family history of illness, and no risky activities or occupations.
- Preferred: Very good health. The individual may have minor health conditions but nothing serious.
- Standard plus: Good health. The individual may be overweight or have some family history of illness.
- Standard: Poor health. The individual may have multiple pre-existing conditions or a family history of serious illnesses. The person might use drugs or alcohol or have a criminal background or poor driving record.
- Table ratings: The underwriter will use table ratings if an individual can’t qualify for standard life insurance rates, increasing the premium cost. This is usually reserved for individuals with serious health issues, like HIV/AIDS or cancer, that could disqualify them from coverage.
- Tobacco ratings: If an individual smokes or has quit smoking within the last year, the underwriter will use special tobacco ratings. Life insurance rates are often much higher for smokers, even with no other health concerns.
Life insurance costs are generally higher for older people and individuals with pre-existing medical conditions. To get the most affordable rate, applying for life insurance while you’re young and still in good overall health is a good idea.
How to improve your life insurance rate and eligibility
There are various ways to improve your chance of getting approved for life insurance and qualifying for a lower rate. Here are a few suggestions:
- Maintain a healthy weight: Individuals with an ideal height-to-weight ratio generally pay lower rates for life insurance. If you’re overweight, getting to a healthier weight can make it easier to qualify for coverage and get a more affordable premium.
- Manage your pre-existing conditions: If you have pre-existing medical conditions, ensure you manage them with your doctor. Take your prescribed medications as directed and check in with your physician regularly.
- Quit smoking: If you smoke, quit smoking before you apply for life insurance. Smokers always pay higher rates for life insurance, even if they don’t have a lung condition. Life insurance companies generally consider you a smoker if you quit within the last 12 months.
- Drive safely: Avoid traffic violations and accidents. Not only will this improve your car insurance premium, but it will also improve your chance of getting cheap life insurance. If you have major violations on your record, they are typically removed after a certain number of years.
- Apply when you’re young: Life insurance rates are cheaper for young people. If you’re interested in getting life insurance, you’ll get a more favorable rate when you’re young.
- Shop around. Insurance companies do not underwrite conditions or risk factors equally. Do your research or work with an independent broker who may know which companies tend to offer a more favorable rate for your situation.
Can you get life insurance without a medical exam?
Many insurance companies now offer “no-exam” life insurance. Depending on your health and the company, this type of policy may offer a higher or lower premium than one with a medical exam. Weigh the benefits of each for your situation.
Certain types of life insurance are not medically underwritten, like final expense insurance. Approval is guaranteed, even if you have pre-existing conditions, but coverage is limited.
What if you lie about your medical history on your application?
If you lie on the application, the life insurance company may refuse to sell you coverage.
What are the eligibility requirements if you take out a life insurance policy for someone else?
The person must also consent to you taking the policy out. Depending on the insurance company, the insured individual might have to answer some questions about their medical history, but they can often avoid taking a traditional medical exam.