How to Ace Your Life Insurance Exam - 7 Money-Saving Tips
The medical exam that you take when you apply for a life insurance policy is a key factor in determining the rate you will pay for coverage.
If you’re looking to save on life insurance, there are several lifestyle changes you can make to enhance your health and convince insurers that you are a low-risk applicant.
In this article we've explained how to ace you life insurance exam with some insider's tips to help you save money.
Here’s what we'll cover in this post:
Quick Article Guide
Here’s what we'll cover in this post:
1. Quit Smoking
Smoking is the poster child of detrimental habits and has been linked to an alarming number of serious health issues, including lung cancer, COPD, oral cancer, and throat cancer. We’re not here to lecture you, but we will say that smoking will skyrocket your life insurance rates. Compare the average rate for a standard 10-year term policy with $500k of coverage:
• 10-Year Term Policy, $500k Face Amount, Smoker: $184.01/month• 10-Year Term Policy, $500k Face Amount, Non-Smoker: $71.92/month
Smokers generally pay twice as much or more for life insurance than non-smokers, because they are essentially doubling their risk of health issues that could lead to death and a life insurance payout. Luckily, most life insurance companies offer non-tobacco rates to applicants who have been tobacco-free for at least 12 months.
After three years tobacco-free, you may even be eligible for Preferred Best rates with some companies.
If you simply can’t kick the habit, consider switching to e-cigarettes. A+ rated insurers such as Prudential will offer you non-tobacco rates with unlimited use of e-cigs, bringing the cost for the same policy as the example above down to $90.57/month.
2. Minimize Alcohol Consumption
Heavy alcohol consumption is also a top risk factor for many life-threatening health problems. If you are serious about putting yourself in the best position to secure affordable life insurance, keep your drinking to a minimum:
1 drink per day for women and 1-2 drinks per day for men are the recommended limits.
For those who are able to quit drinking completely, or at least for an extended period of time, even better.
Exercising can contribute to your health in a variety of ways, including lower body weight, lower blood pressure, lower cholesterol and lower blood sugar—all of which impact your life insurance rates.
In addition, some companies will offer underwriting credits to applicants who exercise regularly, meaning that if you have high cholesterol but exercise regularly, the life insurance company may overlook your high cholesterol and offer you a more favorable rate class.
You don’t have to train like an Olympic athlete to lower your insurance rates; a moderate workout a few days per week is enough to boost your health and build your stamina so you can slowly increase the intensity and frequency of your fitness routine. Everyone has to start somewhere!
4. Lose Weight
Along with, and perhaps thanks to, exercising, losing a few pounds can help you save money on the cost of your life insurance policy. Life insurance companies charge higher rates to applicants with higher body masses due to their increased risk of health ailments such as heart disease and diabetes.
However, it’s important to note that insurers are also wary of applicants who have lost more than 10 pounds in the last 12 months. While losing weight is usually a result of exercise and/or dieting, it can also be an indicator of an underlying health issue.
Most life insurance companies will not give you full credit for the weight you’ve lost if it’s more than 10 pounds in 12 months. Instead, they will provide you a credit for half of your weight loss during those 12 months.
After 12 more months, you receive the full credit for all of the weight you’ve lost. This is due to the fact that most people will regain at least half of the weight they’ve lost within 6-12 months, or “fall off the wagon,” as they say.
Don’t latch on to weight loss as your main route to lower life insurance rates, and certainly don’t put off life insurance just to lose weight. Each year you age, your cost of insurance rises, and usually more than a few pounds of weight loss will offset.
So, you might save 10 percent because you’ve lost weight, but since you’re a year older, your cost of insurance went up 14 percent. Compounding the challenge is the fact that insurance companies usually round up 6 months to your upcoming birthday when determining your rates.
We usually recommend buying a policy before you start a diet. If your weight loss is sufficient enough to save you money, you can cancel your current coverage as soon as you are approved for a policy at a lower cost. If your age has caused your rates to increase more than the amount of money you’ve saved by losing weight, you would simply keep your current policy.
5. Avoid Traveling to Dangerous Regions
If you have a desire to travel to a country that is plagued by conflict, war, violence or crime, wait until you have a life insurance policy in place.
Most insurers ask applicants if they have traveled to a “dangerous” location within the last two years, of if they intend to travel to a dangerous location in the near future. They typically rely on the Department of State travel warnings to determine which locations are dangerous.
If you have recently traveled or intend to travel to one of these countries, they will likely charge a higher premium due to your increased risk.
The vast majority of countries are considered “safe” by life insurance companies and have no impact on your life insurance rates.
An “intention to travel” means that you currently have tickets in hand. As long as you do not have a trip booked when you apply for your life insurance policy, you will not have to pay a higher cost for your coverage, and your family will still be protected. Meanwhile, some states have exemptions that prohibit insurers from penalizing their residents for past or future travel.
These states are CA, CO, CT, FL, GA, IL, LA, MA, MD, MO, NJ, NY, OK, TN, and WA, but other states may also offer exemptions relating to travel. To determine your best option, please feel free to call us toll-free at 955-247-9555.
6. Drive Safely
Have a need for speed? Slow down before you wreck your life insurance rates. Receiving multiple driving violations in a short period of time might signal to insurers that you do not take your safety seriously.
Most companies won’t penalize you if you only have a ticket or two, but three or more tickets in less than five years will usually trigger rate increases for life insurance.
If you have multiple speeding tickets on your driving record, you may want to wait for them to drop off before you apply for coverage. Speeding tickets, in particular, can double the cost of your life insurance policy if you have several.DUIs are, of course, another major concern to life insurers. Most companies won’t offer coverage to an applicant who has a DUI in the last 12 months or two DUIs within the last five years. If you have been recently charged with a DUI, consider waiting two years before applying for life insurance, or as long as five years for a shot at the most favorable rate class, Preferred Best.
7. Drop Daredevil Hobbies
If you’re a skydiver, base jumper, bungee jumper, extreme hiker, or all-around thrill-seeker, you may want to give up your dangerous hobbies before you apply for life insurance. Many companies will automatically decline applicants who engage in hazardous hobbies, and the ones who will entertain application typically charge a “flat extra” of up to $10/per month per $1,000 of coverage for the added risk.
For example, a healthy, 45-year-old male who does not skydive can expect to pay less than $29/month for a $500k, 10-year term life insurance policy. A skydiver in the same health and age range can expect to pay as much as $487/month for the exact same coverage.
Some insurers offer “exclusions” to applicants with dangerous hobbies. An exclusion provides you with full life insurance protection unless you die while in the dangerous hobby designated in the exclusion.
We often receive calls from private pilots who are no longer flying their own airplane. In this situation, we recommend signing an “aviation exclusion” to save money. Your family will still be protected if you die in an airplane accident, as long as you are not the one flying the plane.
If you decide to fly again in the future, buy a separate “aviation only” policy from your pilots club to save a considerable amount of money. The reason for this is that insurers do not want to insure a pilot who isn’t actively flying but could decide to jet on a whim any given day.
Busted Myth: Your Credit Score
Contrary to some of the speculation out there, credit has no bearing on your life insurance rates unless you are in the middle of a bankruptcy proceeding. Only bankruptcy can cause your application to get postponed or declined, because insurers don’t want to be involved in the situation.
For Chapter 7 bankruptcy, an application will usually be postponed until the bankruptcy has been discharged. In Chapter 13 bankruptcies, most companies will postpone or decline the application until on-time payments have been recorded for at least 18-24 months.
Once your bankruptcy has been discharged, it will have no impact on your life insurance rates. And again, your credit score is a non-factor in life insurance.
Bonus Tip: Don’t Try to Sidestep the Medical Exam
If all of this seems overwhelming, you might be tempted to opt for no medical exam life insurance. However, we strongly recommend taking a medical exam for life insurance to give yourself the best chance at the best rates.
Without a medical exam, insurance companies have no way of gauging our health and must therefore be very conservative with their rates. To learn more about why a medical exam is beneficial for life insurance, go to this article.
If you have any questions or want additional advice, call JRC Insurance Group toll-free at 855-247-9555. We are not the sales insurance agents you might be picturing. Instead, we help clients find the right life insurance for their needs by shopping 63 top rated carriers at no extra cost for our services. We’re here to help, not sell!
Managing Partner and Co-founder
Cliff is a licensed life insurance agent and one of the owners of JRC Insurance Group. He has helped thousands of families of businesses with their life insurance needs since 2012 and specializes with applicants who are less than perfect health. In his spare time he enjoys spending time with family, traveling, and the great outdoors.