Insurance Underwriting

It is said that people typically buy life insurance for a couple of different reasons; either they love someone and want to be sure that loved ones are financially secure in the event of premature death or they owe someone money and want the debt eliminated in the event of premature death. In either situation, just because someone wants life insurance and is willing to pay for it, does not automatically mean that an insurance company will offer to insure them; you must qualify for coverage to receive an offer.

Underwriting is essentially the process of evaluation by which the life insurance company determines if you are eligible for life insurance coverage and at what pricing structure. This directly translates into what life insurance will cost specifically for you.

The underwriter is the decision maker in the life insurance underwriting process. The underwriter reviews and analyzes all of the information that is collected during the evaluation/underwriting process and determines based on the insurance company’s underwriting practices and guidelines what pricing structure the insurance company will offer you.

The fundamental questions that must be answered prior to a policy being issued and an offer made by an insurance company are; is there insurable interest? And is there insurability? Regarding insurable interest; the test is that a beneficiary (person of interest) will suffer some sort of financial hardship or loss in the event of the insured’s death. Regarding insurability; the insured’s health and background information must be evaluated to determine eligibility and pricing for coverage.

Your part of the underwriting process is quick and simple and consists of completing the life insurance application and having a paramedical exam.

Paramedical exam requirements are determined by an applicant’s age and amount of coverage being applied for. A field examiner will visit the applicant to obtain height, weight, blood pressure, blood and urine specimens, doctor information, family history and background info. Outside information sources such as the Medical Information Bureau and Registry of Motor Vehicles are also checked. Other requirements could be a telephone interview or electro-cardiogram. You can rest assured that all personal information is held in strict confidence and only shared with necessary parties.

Each insurer sets its own underwriting standards/guidelines of what it considers to be acceptable insurable risks. The application for insurance is reviewed to determine if the individual meets those standards. After all information has been collected and reviewed the assigned underwriter on the case can approve coverage and make an offer. Unfortunately, no two insurance company underwriting guidelines or practices are the same. This is what makes it difficult to compare life insurance quotes and determine what life insurance will cost you.

Even today, the life insurance underwriting/evaluation process remains a mystery to most people and financial professionals alike but You can trust Life Insurance 2.0 to deliver your best result.