Modified Life insurance Offer or Approved other than applied
You just received a modified life insurance offer. Your final policy premium is higher than what you applied for. Why it happens and what to do next when it does.
What is a modified life insurance policy
It is not a surprise if you receive a modified life insurance offer that is higher than your initial quotation. What should you do in case you receive such an offer?
There is a higher chance of getting a higher final premium when you apply for life insurance and go through the underwriting process. When the premium comes back higher than what you expected from the initial quote, then it means that there are lapses in your medical result and your application details. It is the modified offer or also known as approved other than applied.
It is possible to receive a modified life insurance offer from the insurer if the information you provided differs from what the underwriter discovers after carefully reviewing your details and medical examination result.
It isn’t delightful to receive a higher premium than what you expected from the initial quote, but you can always look for better options while you stay covered. You may accept the offer as is or accept the offer for a reduced coverage while you still shop for better quotes online with the help of an independent broker. Also, you may do 360 degrees lifestyle changes to achieve better health conditions..
- A high premium than what have quoted means that you are approved other than applying for a life insurance
- Increased premium is a reflection of the information discovered right after the underwriting process
- The information that you failed to disclose during the initial application is a huge factor
- You have the liberty to accept, reduce the coverage, or totally decline the offer and shop around for other better offers
- It is also a wise decision to accept the offer or decrease the amount of coverage to become financially secure, even if you are still reapplying
Things to do if you receive a modified offer
Getting a modified offer is not a bad offer, as there are few options for you to be going over. The best step for you to do is to work with an independent agent or broker to:
- Accept the modified life insurance offer
- Decline the modified offer
- Make a specific adjustment with the amount of coverage or reduce the term length to lower down the premium, then accept it
- Get quotation from other insurers to find lower rates with the help of an independent agent
The good thing about working with Coach B’s independent agents is that they can help you shop around for favorable premiums from other insurers. Each life insurance company views a health condition differently, so you have high chances of finding better options.
The agent may use the complete medical history with the current result from your exam to compare quotes from multiple insurers. They will recommend a provider likely to offer you a more affordable policy according to your health status.
The best thing to do is accept the offer and continue paying for premiums while an independent broker helps you scout for affordable premiums elsewhere. After approval from other insurers with a better premium rate, you may cancel the different policy.
Reconsideration and reapplication of Life insurance
Health status and risky habits are the insurer’s concerns that might be the reason for receiving a modified offer. If it happens, you may accept the current proposal and make lifestyle changes by quitting drinking or smoking and giving up risky hobbies. Sustaining the changes for at least 12 months or more is a good sign for many insurance providers.
Therefore, you may shop for other affordable policies from a new insurer or ask your current provider for application reconsideration. An insurance provider may want a lifestyle change that is more than a year, depending on your health concern. It is better to ask the insurer upfront what they need to see to lower down your premium rates. Wait for the response of your insurer, and do not reapply too soon.
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Why accept the modified life insurance offer?
If you cannot find a better offer, then the best option is to accept the approved offer other than applied and make some adjustments. You can choose to decrease the term or coverage amount of the policy to get lower premium rates. You may also choose to accept the offer as-is, assuming the proposal is within your budget.
No matter your decision to reapply or apply for reconsideration, here are few valid reasons for accepting the modified offer while exploring other avenues.
1. Stay away from risks of being not protected
As you accept the modified offer, then you are automatically covered once you sign, make the first premium payment, and received a confirmation that the policy is already in force. If you face death right after the policy is in force, your family is financially covered, which is why you want to get life insurance. If you decline the offer while shopping around, then you leave your beneficiaries vulnerable.
2. No penalty for a canceled policy
Many are having second thoughts about accepting and canceling a policy because of penalty fees. There is no penalty to pay for a canceled term life policy. However, there is no refund from the premiums that you have paid unless you cancel during the free-look period offered by the insurer.
Take note that for the whole life policy, cancellation may come with a penalty fee.
3. Lock in the first premium from the modified offer
The idea is to lock in the first premium offered by the insurer to avoid the risk of it getting higher if you left it hanging. There is a possibility that the modified premium offer increases over time as more information is uploaded about your record by the Medical Information Bureau or MIB.
Life insurance providers usually upload information in the MIB database, such as medical exam results and other important information. Insurers are using the database during the underwriting process. Suppose you decline the initial modified offer and apply for another policy from a different insurer. In that case, the second insurer may access the MIB database and do more research.
For instance, insurance provider A might only look for five-year medical records, while provider B might decide might look back for ten years ago. The additional information that provider B might get would increase your premiums. The carrier will now add all your data within the MIB database, and provider A can now access it. As a result, provider A might increase the initial premium based on the new data from MIB.
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When to receive a modified offer?
Life insurance premium rates are based on everything about you, such as personal information, medical records, results of a medical exam, and driving records.
The company will now put all the information you share with an insurance provider will be uploaded to the MIB database. It is not uncommon to spot some discrepancies between the information you shared with the insurer and the medical examination result.
The most common mistakes are forgetting to list prescription drugs and misstating the current height and weight by accident. Mistakes like these will not always get you to higher premiums, but more prominent omission or error might.
For instance, if the medical record says that you have an elevated cholesterol level and you were not aware of it by the time you applied, you are sure to receive a higher final premium offer.
If you forgot to disclose a traffic violation from two years ago, the insurer would find it in your driving records. Therefore, you might receive a higher premium than what was initially quoted.
Moreover, an insurer might give a modified offer if they cannot financially justify the amount of coverage you originally applied. The primary purpose of death benefit is to cover income loss from the breadwinner’s death, end of life support, and funeral expenses.
If you want $1 million coverage, but you are earning $30,000 a year without dependence and debts, the provider might approve you for a lower coverage amount. However, the premium rates are also decreased to changes in the coverage amount.
There are possibilities to receive quotes during these three main stages of the application process.
1. After getting a quote online
2. Quotation right after you disclose health and lifestyle information to your agent
3. Right after the completion of the underwriting process
As you can see, providing more information may directly affect the price of the initial quotation. The initial application consists o basic questions about your health, but a conversation with an agent will provide them with more profound information about your medical history. If you disclose everything during the conversation to an agent, then the final premium after the medical exam will likely be similar to the quotation after the discussion. However, changes with the premium rates may happen if there are discrepancies to the medical result and the information given.
Above all, honesty at the beginning of the process of applying for a policy can give you a close estimation of the final premium. Also, premium rates are less likely to go through a drastic change. If you are approved other than applied, then the best thing to do is to accept the offer with decrease coverage or as is. It is to ensure that your loved ones are secured in case you pass away.
About Coach B.
After starting his financial career with Phoenix Home Life Insurance Company back in 1992, Scott decided he wanted to provide people with an easier and more enjoyable way to buy life insurance. That was the start of Coach B. Life Insurance, whose mission is to be transparent, honest, and helpful to customers — without ever bugging or pushing them.
In the years since then, he has worked tirelessly to improve the process of shopping for insurance. His goal is to make sure that everyone who comes to Coach B. — whether they end up buying a policy or not — has the best possible experience.
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