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Steps to Buying Texas Term Life Insurance

Below are the basic steps in the process of purchasing a Texas life insurance policy.  The outline includes selecting an agent and an insurance carrier, submitting the application and getting the coverage issued.  Also included are consumer tips to help make the process more beneficial.

Texas life insurance is a much more complicated purchase than most.  Typical purchases of goods or services will cost one consumer the same as another unless there are considerations for the type of payment or volume of the purchase.  Life insurance is unique because each transaction is priced according to the buyer.  Two consumers of the same age, gender, and geographic area applying for the same type of life insurance coverage may pay a very different premium.  This is because each buyer’s health history is as unique as he or she is, with different family health histories and diverse family backgrounds.  Another aspect that makes the purchase of life insurance more complicated is the length of time it takes to complete the transaction.  A consumer buying a fully underwritten life insurance policy may complete the buying process in 45 to 60 days depending on the carrier’s requirement for health history and medical records.  There are very few products today that a consumer cannot purchase and use the product on the same day. 

The following are the typical steps in buying a Texas life insurance policy.

  1. Decide whether an agent will be used to assist with the purchase of the life insurance policy. Insurance agents are obviously biased regarding the need to use the skills of an agent when purchasing a life insurance policy.  As with any complicated financial product, consumers should utilize the skills of a licensed agent in selecting the correct coverage and helping to make the enrollment process as efficient as possible.  It is important to note that the insurance carrier will charge the same premium whether you use an agent or not.  An agent will do a more comprehensive job in helping the consumer determine how much insurance is needed, what type of policy meets the financial requirements, and which carrier and policy provide the best value based on medical history and lifestyle choices.
  2. Review many different rates and proposals. The consumer should compare the premiums and proposals from at least six life insurance carriers in order to understand what factors contribute to the final premium.  An independent agent is not employed by any one carrier but represents several carriers, which allows the agent to provide multiple options.  Also, agents affiliated with a single insurance carrier are limited in the options available to address specific life insurance needs.  For example, if an agent representing a limited number of carriers and life insurance products is contacted to provide a life insurance quote and the applicant smokes cigars, the agent may only have a few carriers to consider with very little difference in premiums.  The independent agent has access to a greater number of carriers and can place the policy with the carrier that is the least punitive when rating for lifestyle choices such as tobacco use. 
  3. Complete the application. Once an agent and life insurance proposal have been selected, the next step is completing the application.  Consumers should make sure that all questions are fully understood and that all questions are answered completely and accurately.  A life insurance application is part of the contract between the life insurance carrier and the policy holder.  Any material and substantial oversight by the policy holder can be used to restrict benefits or cancel the life insurance policy altogether. 
  4. Requirement for a physical. All reasonable costs associated with a physical are the responsibility of the insurance carrier, who will send a nurse to your home or office to collect certain health data.  Typically, the nurse will ask a series of medical questions, record your vital signs, height, weight, and collect blood and urine samples.  Some companies will use electrocardiogram (EKG) equipment to gather additional, more detailed data.  It is important that applicants discuss with the agent how to prepare for the physical to ensure the most favorable results since results to reduce the chance of higher premiums or even the possibility of a declination.  For example, an agent will make sure the applicant is aware that in order to prevent unfavorable exam results, it is important to fast for twelve hours prior to the exam.

      Wait for results and decide on the offer. After the insurance carrier receives the application and summarizes the physical results, the carrier may also request medical records from the applicant’s doctor.  After the application is complete, the Texas life insurance underwriter will review the application and make a decision to offer the applicant an insurance policy or to decline the application.  The offer could be the same as the agent quoted, or it could be lower or higher based on the information disclosed during the review process.  Once the applicant receives the printed offer and reviews the contract, the applicant can either accept or decline.  The review period is referred to as the 10-Day Free Look Period.  If the applicant declines the offer, the agent can use results from the original application to consider other carriers. If the applicant accepts the offer the new policy holder will receive the policy by mail in about a week.

6.      Each step outlined is an abbreviated explanation to provide an overview of the life insurance enrollment.  The consumer should direct more detailed questions to the agent or should research information through the Internet.


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