What is a life insurance questionnaire?
[social_share]When a person applies for life insurance they will often be sent a questionnaire that needs to be filled out and sent back to the life insurance company. This is a crucial part of the life insurance process and will dictate many things, including the premium and whether or not a person can be accepted for life insurance.
Life insurance is essentially a business where risks are averaged out between a group of people, and how well a life insurance company does depends on whether they assign them to the right group. If the life insurance company underestimates the risk that they have of dying or becoming disabled during the term then the company will pay out too much and so will go out of business. If the life insurance company overestimates the risk and puts the life insurance applicant in a group with people of a higher risk then they will have very high premiums quoted and the company will find that they are losing customers.
One of the primary tools that life insurance companies use is the questionnaire. This form tends to be far longer than almost any other type of personal finance application form, and is longer than most mortgage forms for example. The questionnaire will ask a number of different questions in order to measure the risk of the person. There will be some obvious questions such as whether there has been any serious disease diagnosed in the time, but there will be less obvious questions such as the highest level of education that the person has reached. The questions will vary from company to company.
These questions, in almost every case, are intended to measure the risk, with questions being asked that are designed to estimate the chances of a person dying at a younger than expected age. This will mean that there are questions about whether parents are still alive and if not what age they were when they died. Educational qualifications and occupations can also have a significant effect on life expectancy.
Many people will also be asked to fill in a medical questionnaire with far more detailed questions about the health and habits of the applicant. This can be a pure replacement for the medical examination, although these policies tend to have a lower pay out in relation to the monthly premium that is being charged.
