Why do life insurance applications have so many questions?

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We know life insurance applications may seem long. And trust me, we’ve worked with our parent company MassMutual to try and make the Haven Term application as streamlined as possible.

That said, these questions are necessary to verify your identity, determine your health, review your medical background and ultimately, determine your rate class.

If you haven’t purchased a life insurance policy before (or at least peeked at the start of an application) you might be surprised to see that questions can range from asking for your Social Security Number and occupation to hobbies and what medications you’re taking.

As a customer service representative at Haven Life, I’ve communicated with plenty of customers who are seeking details and reasoning behind the in-depth and oh-so-personal questions. It’s understandable and also very explainable.

What’s with all the questions?

One of the most important parts of the life insurance buying process is, well, your application. The answers you provide help the underwriting algorithms determine what risk you present, the rate class for your policy and the premium amount associated with it.

If you’re unfamiliar with the term “rate class,” it is the technical term for when an insurance company determines your individual risk of dying relative to other people just like you. An uncomfortable thought? Yes, we know. But, it’s the simplest way to explain it. As a rule of thumb, typically the healthier you are, the better your rate class.

Every life insurer (that’s selling you a medically underwritten term life insurance policy) is going to analyze your application and medical history for some significant health triggers. You might be tempted to think, well, I won’t get a medically underwritten term life insurance policy then.

Don’t do that.

Medically underwritten term life insurance is one of the most affordable types of life insurance available. That’s why it’s the only type we sell. The reason medically underwritten coverage is often a better value is because the life insurer, through the application and medical exam, has a pretty clear insight into your health and lifestyle. This knowledge enables the insurer to personalize the premium pricing to you and only you — versus pricing it more generally like they must do with simplified issue policies. Uusually, a non-medically underwritten policy should only be considered if you have chronic or severe health issues.

Below, I’ve outlined some key application questions that result in the most inquiries from our customers, which you may be wondering about too.

Why do I have to provide my Social Security Number?

You should always understand why someone is asking for your Social Security Number.

When applying for any life insurance policy, providing your Social Security Numbers is required for multiple reasons:

  1. Your Social Security Number is one of the primary ways the government can identify you, know you exist and locate you. If you read our post about how a death benefit is paid out, you’ll also see that death records (which are updated by your SSN) are a vital tool in ensuring your policy is paid out in a timely fashion.
  2. Additionally, your SSN is used to access information necessary for underwriting your application. This may include information from third parties such as the Medical Information Bureau (MIB). The MIB maintains an extensive database of medical information and occupational risks on past applicants for life and health insurance. This information is reviewed and compared it to what’s in your application. If you’re a first-time applicant, there will be no data in this database.
  3. Finally, it’s required by law for verification purposes – to identify the owner of the policy. “Why”, you ask? To help prevent criminal activities such as identity theft and money laundering.

Why do I have to disclose my driver’s license number and driving records?

Another surprise for some people is that the application requests your driver’s license number and driving history.

Your driver’s license number is used as another way to verify your identity. It also allows access to records from the Department of Motor Vehicle database. Looking at driving records isn’t a big deal for the vast majority applicants. However, numerous speeding tickets, reckless driving, DUIs, and suspensions show a higher propensity to take risk and correspond to a higher risk of death due to motor vehicle accidents. As the risk you represent directly impacts your premium amount, detailed driving records are a critical factor.

Why does the application ask about my travel plans?

Generally speaking, underwriters don’t care too much if you’re planning on taking your family on a cruise to the Bahamas or if you’re escaping to a romantic weekend in Paris.

(But, can I tag along?)

That said, if you are applying for a life insurance policy and have some trip planned, you will most likely be asked about that. Don’t worry – travel is not a concern in the vast majority of applications. Typically, underwriters are looking for high-risk items here: are you traveling to war-torn countries or dangerous regions of the world? Are you traveling so frequently that you really can’t be considered a U.S. resident? Are you traveling for higher-risk reasons such as missionary work in hostile countries? If so, they may need to work with you to better understand the details so they can assess your risk appropriately.

Why do insurance companies care about my hobbies?

From underwater diving, hang gliding, parasailing to ballooning, bungee jumping and mountain climbing… if you’re the adventurous type, kudos to you! The application will ask if you participate in various activities that are considered risky. While individual activities typically won’t make your life insurance rates increase, these questions do provide a snapshot of your life as a thrill seeker. Kind of like what happens if there are numerous infractions in your DMV records.

In some extreme cases, there is an additional cost added to the price of the premium (called a flat extra); this cost is mostly designated for high-risk hobbies or occupations.
The great news is: if you participated in any particularly risky activity at the time of application and haven’t done it again for a year or more you can apply to have your case reviewed. This would potentially remove that flat extra fee.

Life insurance applications can be intimidating, I know. It takes time and effort and… it’s easy to push it off to another day. But, understanding the value and reasons behind the questions asked should hopefully make it a little easier to push through. These questions help the insurer give you the best and lowest rate possible.

And on the bright side, here at Haven Life, most of our customers manage to complete the entire application within 20 minutes. Now, go forth, be informed and, see how simple buying term life insurance can be.

Life insurance that's actually simple.

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Real Rate is based on your application and third party data obtained during underwriting.

Haven Term is a Term Life Insurance Policy (DTC 042017 [OK1] and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. Policy and rider form numbers and features may vary by state and may not be available in all states. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Our Agency license number in California is OK71922 and in Arkansas, 100139527.

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