Why Insurers Ask So Many Questions!

If you're applying for life insurance expect to be bombarded by questions. Here's why it's so important to answer them carefully.

If you're buying a home, getting married or have a baby on the way, you may be thinking some life insurance might be a good idea. These days setting up a policy should be pretty easy with many insurers enabling you to apply online. But you may be surprised just how in depth the application process can be. In this article I'm going to look at what a typical insurer will ask you and why you should be careful how you answer.

The cost of your premium will be affected by a whole host of factors. Insurers ask so many questions because they are assessing the probability of a claim being made during the policy term. The more likely that seems, the more expensive your cover will be. In some cases, the risk of making a claim is too high, leading an insurer to reject your application.

So, here's a rundown of the questions you'll usually be asked:

How much cover do you need? - The more cover you want, the more it will cost. But insurers will look at whether the amount you asked for seems reasonable. Would a housewife, for example, need £500,000 worth of life cover? Usually, you'll be asked about existing policies to get a picture of the total amount your life is insured for. And expect to be asked if you have been declined in the past.

Your age -- The younger you are the better! It doesn't take a genius to figure out younger people generally have a cleaner bill of health and are less likely to claim in the early years of their policy. This allows insurers to rake in lots of lovely premiums in the meantime!

Your sex - Women tend to live longer than men and therefore they pose less of a risk to insurers. This simple fact is rewarded with lower premiums for the girls!

Your occupation - An insurer will want to know if your job involves risks. You may be asked whether you work at great heights, in the armed forces or on an oil or gas platform. In other words, they want to know if your occupation makes you vulnerable to physical harm.

Your height and weight - This enables an insurer to calculate your Body Mass Index (BMI). The BMI is calculated by dividing your weight in kilos by the square of your height in metres. A BMI greater than 30 is defined as obese by the World Health Organisation. Since obesity is linked to a series of health problems, insurers want to know where you sit on the BMI scale. Check out your BMI here.

How much do you drink? - You'll be asked to translate the amount you drink into a number of units per week. Do try to be as accurate as you can. Excessive alcohol consumption doesn't go down well with insurers.

Do you smoke? - Smoking has a huge impact on your health and life expectancy, so smokers should expect to pay higher premiums. Some insurers will regard you as a non-smoker if you haven't smoked in the last 12 months. So give up now and this time next year you could enjoy cheaper premiums.

Your personal medical history - You'll be asked about any conditions you have suffered from, investigations, treatment or operations you've had at any time in your life.

Questions will also be asked in relation to specific conditions such as heart problems and cancer. While it's important to give all the information accurately, don't feel you need to mention every cough and cold you've ever suffered! Some insurers will give you guidance on what they don't need to know. If you're unsure what to include, ask.

Your current health - This will give you an opportunity to declare anything else that you haven't previously mentioned.

Your family's medical history - You'll be asked about the health of your immediate family (parents, brothers and sisters) to allow an insurer to assess the risk of hereditary illness. Usually you'll be asked whether your family has suffered or died from a series of specific illnesses before the age of 65. This can be difficult to answer if you're no longer in contact with your family or you were adopted. If you run into difficulty tell the insurer.

Your pastimes - Like your occupation, the insurer will want to know whether you're likely to get involved in hazardous sports or pastimes which could put your life at risk. This includes activities such as parachuting, rock climbing, mountaineering or diving. If you're a bit of a daredevil expect to pay higher premiums.

You may also be asked about use of recreational drugs, whether you have ever tested positive for HIV and hepatitis B or C and any travelling you have done or plan to do in far flung places.

Completing a life insurance application will certainly get you thinking. An insurer will then assess your answers to decide firstly whether they can insure you at all. Secondly, whether they need even more information and thirdly the premium you'll have to pay.

I know this may be time-consuming if you've had medical problems but it's crucial you answer the questions to the best of your knowledge. Failure to do so could lead to a terrible situation where a claim is rejected. Insurers have been criticised for finding any excuse to turn claims down. Regardless of whether there's truth in that or not, the industry is now taking steps to make claims more transparent.

You can do your bit by answering every question as fully as you can.

More: Look After Your Life | Get a life quote at The Motley Fool Insurance Service.

The comments above are the opinions of the author only and do not represent advice specific to your circumstances.

This article has been approved and issued by Direct Life & Pension Ltd who are authorised and regulated by the Financial Services Authority.

The Motley Fool Insurance Service and The Motley Fool Life Insurance is a trading style of The Motley Fool Limited. The Motley Fool Life Insurance is provided and administered by Direct Life & Pension Services Limited. The Motley Fool Limited is an introducer appointed representative of Direct Life & Pension Services Limited, who are authorised and regulated by the Financial Services Authority. Registered Office: The Bailey, Skipton, North Yorkshire, BD23 1DN.