If your only previous experience with obtaining life insurance has been through an employer or other group plan, you’ll find buying coverage on the individual market a bit more complex. First, you’ll have to evaluate the many policies available and the insurers that write them. Under a group plan, your employer does the work for you. The second difference is that when you buy life or health insurance on the individual market, your application will go through the underwriting process. This differs from group insurance policies, where you qualify for coverage simply by being a member of a covered group. All you have to do is complete a simple, one-page application when you first become eligible for coverage.
The individual life insurance underwriting process begins when you complete an application. The application contains questions about your health history, your family’s health history, and your lifestyle – for example, your occupation, hobbies, anticipated travel, and use of tobacco, alcohol or recreational drugs.
The application also includes a release that permits the insurer to obtain personal information from other parties about you. These include medical professionals and medical organizations, other insurers, even the DMV. The insurer is looking for health risks, as well as “moral hazards” an applicant might present. These include criminal records, debt, excessive amounts of life insurance or other indications the applicant might attempt to defraud the company.