What You Should Know before Applying for Key Man or Disability Insurance

When applying either Key Man or Disability insurance the issuing insurance company will learn as much as it can about you to determine how much you will pay for the coverage for which you apply. This payment is called the premium and is usually paid either monthly or annually. The higher the coverage amount, the more the insurance company will want to know about you before it agrees to issue the insurance policy.

The insurance company will need your health history to help determine the likelihood of when you will become unable to work or die, since that is when the company will have to pay a claim on your policy. To get a complete health history, the insurance will usually require a medical questionnaire including disclosure of any health problems, medication and tobacco use, a statement from your physician, blood tests and possibly a stress test. Applications usually include questions about whether you have ever tested positive for HIV or AIDS.

Information regarding your family’s health history is also important to the insurance company when you apply for Key Man or disability insurance. If your family has a history of cancer there is a higher risk that you will develop cancer also.

Past insurance applications will also be reviewed through a company called the MIB. Insurance companies report the outcome of applications, but not specific details in your application to the MIB. For example, the MIB could have information including how much insurance you have applied for and whether your application was approved, denied or withdrawn.

It’s not just your health history that will determine whether you are approved for insurance and your premium. Your lifestyle will be under scrutiny also. What will the insurance company want to know when you apply for Key Man or Disability Insurance?

What do you do for a living? A race car driver will pay much higher premiums than an office worker since the driver’s job has a much higher risk of injury and even death.

Are you a good driver? A poor driving record including tickets and accidents could also make you a higher risk for an insurance company.

How do you spend your spare time? If you engage in risky behavior such as extreme sports, drug use or smoking, the insurance company can charge you a higher premium or deny your Key Man or Disability insurance application.

What is your credit score? Your credit report can help show that you are financially responsible.

How will the insurance company get this information? When applying for Key Man or Disability insurance, the information you provided will be verified by the insurance company through the MIB, credit bureaus, your doctor, current and past employers and even friends and neighbors. It’s important to be truthful on your application. If you are approved for a key man insurance policy and the insurance company learns your provided false information on your application within two years of issuing your policy, your policy will be void.