Completing an Insurance Application

Instructor: LeRon Haire
In this lesson, the process of completing an insurance application from beginning to end will be analyzed. The lesson will also provide details as to what is needed to complete the application along with consequences for an incomplete insurance application and disclosures.

An Intro to Insurance

An individual is unable to get insurance without first completing an insurance application.

An insurance contract, also known as an insurance policy, is an agreement which moves risk from the insured over to the insurance organization. When trying to complete an insurance application, it's important to know that the risk is now being transferred over to the insurance company. Let's take a look at the steps to completing an insurance application, along with any disclosures and consequences of not completing an insurance application.

The Process of Completing an Insurance Application

Step One - Search for an Insurance Company

A rule that we all learned at a young age that it is best to crawl before you walk. As a parallel, the very first step when trying to complete an insurance application is to review the different types of insurance companies. Typically, this can be done by searching the internet for a list of companies, followed by reviewing each companies website to determine whether or not they are best suited to fit your insurance needs. An individual may also select to have an independent insurance agency do the heavy lifting and provide quotes and information.

Step Two - Completing the Application

This step is when the insured will literally fill out the insurance application. The most obvious point when completing the application is to ensure that there are no blanks left unfilled by the insured.

The individual should be sure to complete this application in a safe and secure area as there will be personal and confidential information that should be kept private at all times.

The insurance application will inquire about your health as well as your family's history of health. It is important that you list this information as accurately as possible because this will help to determine the amount you will pay per month (known as premiums) if you are approved for the policy. A lack of this information or failing to provide the required signatures may result in a policy denial or higher premiums.

Step Three - Getting a Physical Exam

The next step in completing an application, getting a physical examination, is also important as it relates to whether or not you will be approved or denied. A rule of thumb for any insurance organization is that a policy may be denied or a premium may be higher if an individual is considered a risk to incur an injury, illness, or other type of ailment.

Step Four - Underwriting

The term underwriting can be defined as determining the amount of coverage a policyholder should have, the rate that they should pay for it, and even ultimately to decide if the policyholder is worth the risk of having a policy at all. This step includes reviewing information regarding your medical history as well as your family's medical history. There are various factors that underwriting reviews to help determine whether to proceed with giving someone a policy as well as determining the rates and those factors are as follows:

  • Overall health
  • Smoker vs non smoker
  • Height and weight
  • Body mass index

Step Five - Approval or Denial

This step is the culmination all of the work that a potential policyholder has put in thus forth. If coverage is approved, then you will have to sign to accept and send the policy back to the insurance company. This will be your binding agreement for the insurance contract. In many instances, there is typically a 30-day window to look over the policy to make sure that it is to your liking and that everything has been completed as you wish.

Consequences of an Incomplete Application

As mentioned earlier in the lesson, an incomplete application can have major consequences for an individual attempting to get an insurance policy. The most detrimental of those consequences being that the individual may possibly have their application denied due to things such as not signing in the designated areas or not providing medical information.

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