A life insurance policy is an extremely important form of insurance, second only to home insurance, and it may even be the most crucial policy you hold.
When you apply for a life insurance policy, you will need to go through a comprehensive application process where you provide detailed information about your overall health and specific lifestyle. The underwriters at the insurance company then use this information to assess the risk you pose for potential future claims, which determines whether you will be accepted for coverage and the premium rate you will be charged.
Generally, you are required to provide different types of information, including basic personal details like your name, address, and employer, as well as more specific information such as height, weight, and lifestyle habits. The extent of information required may vary depending on the type of coverage you are seeking.
During the application, you must disclose all fact that can have impact on the assessment of your insurance including:
Medical History Financial History Occupation Sports and Pastime Activities
You must inform the insurer about any relevant medical conditions from birth until the policy goes into effect. If you develop a relevant medical condition after the application process, you are still obligated to notify the insurer.
Relevant medical history refers to information that can impact your policy. For example, mentioning a past case of the flu may not be relevant, but disclosing a congenital heart defect is important. When in doubt, it's always best to disclose all relevant information.
In some cases, if you can't recall precise details of your medical history, the insurer may request a Medical Authority form from you, allowing them to contact your doctors and access your medical records. Additionally, certain insurers may require a medical examination or blood test based on your medical history, and the cost is usually covered by the insurer.
It's important to note that not all insurers will request medical examinations, blood tests, or access to medical records.
For lump sum benefits like life insurance, trauma insurance, and total and permanent disability (TPD) insurance, you generally only need to provide limited financial information, such as your annual income. However, if you're applying for a larger lump sum benefit (typically over $5 million), you may need to provide justification for needing such a high level of coverage. For income protection insurance, you will need to provide proof of income at the time of application. If you have a history of bankruptcy or insolvency, this must also be disclosed.
Your occupation should be disclosed to the insurer for life insurance, trauma insurance, and TPD insurance. For income protection insurance, further details about your occupation may be required, including qualifications, experience, and the specific nature of your work.
Participation in sports and pastimes can affect your premiums, so it's crucial to disclose this information to your insurer. While mainstream sports typically don't impact life insurance and trauma insurance premiums (e.g., football, cricket, basketball, tennis, swimming, and golf), engaging in dangerous or extreme sports and pastimes like skydiving, bungee jumping, motorsports, mountain climbing, or scuba diving may have an impact. If you participate in such activities, it's advisable to consult with specialists who can help you find suitable coverage.
During the application process, it is your legal obligation to provide full disclosure of any information that could potentially impact the insurer's decision to offer you coverage. This includes information that you should reasonably know and that may affect their decision.
A life insurance policy is essentially a legally binding agreement between you and the insurance company. If you fail to honestly and accurately answer the application questions to the best of your knowledge, it can lead to modifications in your contract, a reduction in the coverage amount, or even the cancellation of your policy or denial of claims.
Once the insurer has all the necessary information, they will make an assessment based on the provided information. Therefore, it's essential to provide accurate and honest answers.
The insurer can make several decisions, including: Medical History Financial History Occupation Sports and Pastime Activities
If you are unsatisfied with a decision, it may be possible to review it with other insurers. In case of a declined application, it's advisable to discuss alternative options with your broker. If your application is accepted, the insurer will notify you in writing and provide a Policy Schedule that outlines your coverage details, including the due date for the first premium.
Regarding changes in occupation, you are generally not obligated to inform your insurer, even if your new occupation is riskier than your previous one. This is because most life insurance companies offer Guaranteed Renewable contracts. However, it's always recommended to refer to your product disclosure statement (PDS) or consult a broker to ensure certainty.
October 25, 2022
October 25, 2022
October 25, 2022
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