There may be no other business transaction in your life where you have to disclose more personal information than when you purchase a life insurance policy. While this may seem strange, it is because a company is being asked to be willing to pay out hundreds of thousands and even millions of dollars in exchange for what could end up being a couple hundred dollars or less.
However, to be willing to accept this risk, they want to obtain as much information about you as possible to minimize the risk and to assess how much money they will need to accept it. In short, this is why so much personal information is requested.
While our online application will give you a good idea of what information is needed, as a brief summary here are the main factors used to determine a risk rating for your application and a corresponding price for your policy:
- Health history
- Current health (through a health exam and/or health interview)
- Family health history (parents and siblings)
- Activities (specifically “risky” activities such as scuba diving, mountain climbing, etc.)
- Income (to determine if you qualify for the requested insurance amount)
- Drug use (both legal and illegal, including tobacco and alcohol use)
- Driving history
- Criminal history
- Foreign travel
- Residency status
- Military service
While this is a lot of personal information, insurance companies and their representatives (including insurance agents) are under strict professional obligation to establish and maintain significant privacy and security measures to keep all your information confidential.
When it comes down to it, although you do need to disclose what is generally considered personal and private information, you are exchanging this information for an offer from a company that if you die while your life insurance policy is active, they will pay out a significant amount of tax-free money to your family or loved ones when they need it the most.