When applying for life insurance, there is a great deal of information that is used for making an underwriting decision. Most people know that health related criteria are an important factor in whether you’ll be approved, as well as how much your premium cost will be. However, what many may not be aware of is that more and more, insurance companies are also looking to an applicant’s credit score as a way of determining what type of risk they may be.
If you’re in search of coverage, you need to be careful about your credit score, because this can have a big impact on the amount of premium that you’re charged for your policy – even if you’re in the very best of health. In some cases, rates may be increased by 3 to 5 percent based on an applicant’s low credit score.
In addition, in some instances, if an applicant has filed for bankruptcy, it may even be possible not to be approved for coverage at all – at least for a certain period. However, if you are on a payment plan – provided that you have proof of making payments – coverage may be purchased through certain companies.
With this in mind, it is important that if you have bad credit, that you have a good strategy for obtaining the coverage that you need. The good news is that you do have options available to you – and we can help you to find them.
Why Your Credit Score Matters to Insurance Companies
While it may not seem to make sense that an insurance company would care about an applicant’s credit score, there are some very good reasons why this is the case. First, from the insurer’s point of view, if an individual is not responsible with his or her money – meaning that if he or she has a high amount of unpaid and / or high-interest debt piled up – then it may be likely that the individual may also not be responsible with his or her life in general.
Although this way of thinking may seem somewhat harsh, carriers are in the business of insuring people for large sums of money. So, they do not want to make bad decisions on the people they are “risking” their money on.
Another area where insurance companies look closely is making payments late. This is because if you pay your life insurance premium late, it is possible that you could lose your coverage. In this case, you could end up leaving your loved ones without the proceeds that they need should the unexpected occur – on top of leaving them with any unpaid financial obligations that the insurance proceeds were meant to pay off.
What is Your Insurance Score and How Does It Work?
Over the past several years, insurance companies have started to use criteria known as an insurance score when evaluating individuals for coverage. This factor is also referred to as an insurance credit score. It is a type of numerical point system that is based on various characteristics that are found in an applicant’s credit report.
While there is not a direct relationship here as there is when lending decisions are made when using a person’s credit score, insurance companies do use a person’s insurance score when trying to determine a person’s overall underwriting criteria, as well as to determine the amount of premium to charge for their policy.
While insurance scores have typically been used when underwriting auto and homeowners insurance, however, they are not usually found when underwriting other lines of coverage such as health or life insurance – at least as of this time.
How to Increase Your Credit Score to Obtain a Lower Premium
Having poor credit can have an influence on the decision that an insurance underwriter makes on a policy application. Unfortunately, this can have negative consequences across the board – as it could mean that loved ones may end up going without the financial protection that they need should the unexpected occur. Certainly, one way to help in rectifying this is to raise your credit score in order to obtain more positive premiums.
In attempting to find better premium rates, there are several ways that you can go about raising your credit score. These include:
- Eliminating high-interest debt by moving the balance to a more favorable, lower interest option
- Paying bills before their due date
- Checking your credit report and having any false remarks removed
- No longer using credit to pay for items, and using only debit, checks, or cash instead
Where to Find the Best Life Insurance If You Have Bad Credit
If you are buying life insurance, your first thought should be finding an agency or agent who has a contract with more than one insurance company. That way, you won’t be bound to the underwriting standards of only one company. By applying through multiple carriers, you will have a much better chance of finding one that may accept you as an insured.
In addition, when you compare the products of more than just one life company, you can also get a better idea of the many different offerings, policies, benefits, and premium quotes between the various companies – and you can then determine which one works the best for you.
At InsureNow365.com we can help with making your policy comparisons. In doing so, we can also help you with other life policy purchase decisions, such as what type of policy is best for you – term, whole life, or universal – and how much coverage is the right amount for your survivors’ current and future needs. In addition, we can assist you in locating the right life carrier for your needs. By pointing you in the right direction at the beginning of the process, we can save you a great deal of time and frustration throughout the entire life application and underwriting process.
We can also do so quickly and easily – and conveniently, either from the comfort of your own home or over the phone! To get started just complete the quote form to the left and you can have quotes in no time.
We understand that the purchase of life insurance can be a big decision. There are lots of variables to put together – and at times, it may seem overwhelming. But we’re here to walk you through the process step-by-step. So, contact us, 888-229=7522, today – we’re here to help.