life insurance underwriting

Life Insurance Underwriting

The underwriting process for life insurance

At some point, you need life insurance to cover you and your family, but you do not know the risk associated with getting the coverage. Before you get the life insurance, you must go through the underwriting process where insurance underwriters determine how much risk your insurer will cover and the amounts that you are expected to pay.

 Insurance underwriters manage the insurance underwriting process and their major responsibility is to determine risks. Our insurance has professional underwriters that assign you a specific risk category and calculate a fair price for your coverage.

The insurance underwriting process involves your insurance provider assessing your life insurance application and assigning your premium according to your risks. Life insurance underwriting involves several steps and they approximately take two or eight weeks to complete. The waiting period for your doctor’s reply could be extended if you want a question from your insurer.

Does the Life Insurance Underwriting Process Work?

The insurance process is extensive and the underwriter asks you several questions about your age, medical history, medical condition, health history of your family, job, and hobbies. In some circumstances, life insurance companies may obtain your medical records from your doctor, prescription drugs history, and driving history. Furthermore, underwriters also ask questions about your lifestyle which include smoking habits, credit check, MVR, and the security level of your home or apartment.  

A policy “fully underwritten” includes all the medical data. A person can apply to be eligible for medical insurance if they have undergone a full medical examination. You may avoid a written examination if the insurer uses accelerated underwriting.

Different types of life insurance underwriting

Underwriting processes can vary depending on the policy that you have chosen. There are only two major categories of life insurance underwriting options which include full issuance/fully underwritten and simplified issue underwriting. Insurance companies use different life insurance underwriting options depending on the life insurance policy. The two categories play a role in the price you will pay for coverage and the duration of time that it takes before you get coverage. Both underwriting options have differences as illustrated.

Simplified Issue Underwriting

You do not need to go for a medical exam, but therein lies its limitations. You will have less freedom on the amount of death benefit associated with your life insurance policy. Currently, a simplified issue carrier offers an optimum of $400,000 in coverage. The positive side of the simplified issue underwriting is that it is very convenient and you can get it in less than 15 minutes.

Simplified issue underwriting requires the following;

  • MIB– Medical information Bureau data
  • MVR- Motor Vehicle Record- The motor vehicle report will give them 3-5 years of your driving history.)
  • RX- Medical Prescription Report

Notably, all insurance companies have various underwriting guidelines, but basically, a simplified insurance policy applicant must meet those rules. After evaluating the data collected from the MVR, MIB, and RX, the insurance underwriters make a decision of giving you the simplified issue underwriting.

In addition, you need to note that companies have their laws concerning the amount of coverage that you can access under the simplified issue underwriting.

 Fully Underwritten

A fully underwritten policy is issued after the underwriters have taken exceptional inquiry into various details. The underwriter examines the MIB, RX, and MVR, then they will ask you about several details. In addition, you will also undergo a medical exam which is a mini-physical.

Details of the Mini Physical Medical Exam

Blood Pressure

Urine samples

Height and Weight

EKGs for seniors

Heart rate

 Other possible checks include

ECG- Resting Electrocardiogram

CS- Cognitive screen

PFS- Personal financial statement

HOS- Home office specimen-urine

Blood Chemistry profile

APS-Doctor’s records for review

Personal History Interview

TRD- Treadmill Electrocardiogram

Can I Skip the Medical Exam?

If you opt to skip the medical exam, then you should know that you qualify for the no medical exam life insurance. In this case, you have two options

Guaranteed issue life insurance policy- the insurer does not ask any questions, but you can have a 2-3 year waiting period. In addition, there is no medical exam.

Simplified Issue life insurance policy- there is no medical exam, but you will fill out a questionnaire about your health status, past medical history, family medical history, driving questions, past declines, hospitalizations, and drug use.

What risk factors are underwriters checking?

Age- In an effective underwriting procedure, insurers at age are the first risk factor. Life insurance rates vary according to age and life expectancy. The amount of coverage that insurers assign with age varies, for example, younger applicants get the best premiums since they pose less risk to the insurers.

Gender– Other insurances consider gender and they offer gender-specific premiums since they believe that women earn less money than men. According to recent data released by the CDC, the average life span for women is 76, 72, and 75.8 years, respectively, therefore women will pay less than men since they have a longer life expectancy than men.

Medical Exam– The underwriter’s interest in the mini-physical medical exam includes nicotine, illegal drugs, and alcohol markers, overall blood results such as CBC counts and lipid panel, EKSs for seniors aged 55 years and above to measure their cardiac output. People with high-fat levels or obesity pay higher premiums. Some companies use the BMI as a basis for determining the amount of coverage. A higher BMI has always been associated with diseases such as obesity, cancer, and other cardiovascular diseases.

Personal Medical History– Insurers consider your medical history before they offer your life insurance. If you have had chronic diseases such as respiratory diseases, high blood pressure, and cholesterol, they will affect your policy cost. If you have poor health, you can consider simplified issue life insurance or guarantee disuse life insurance.

Family History– Your family plays a role in the amount of life insurance coverage that you can get. Family health history offers a clue into your future health. Some of the factors that companies will examine in your family health history include diseases such as Alzheimer’s, cancer, kidney, liver, and cardiovascular disease, cancer, sudden death before 50 years, and family members’ drug or alcohol use.

The importance of examining these conditions is that you and your family are genetically connected and there could be a probability that you may develop the same health problems. However, our company ensures that you can get life insurance policies even when you have the risk of developing these health conditions.

Smoking and Alcohol intake– insurers ensure that you pay higher premiums if you smoke and drink. Marijuana use affects your eligibility for coverage and the premiums that you will need to pay.

Occupation and Hobbies– Some people have high-risk jobs such as police detectives, construction workers, natural resource workers such as those in the oil and gas industry, mining, fishing and lumber, pilots and hostesses, firefighters, and military persons. Their life insurance coverage will be more expensive. These people have a higher risk of losing life given the nature of their jobs. Their jobs also increase the amount of risk that they are exposed to. For example, workers mining coal risk developing various respiratory diseases.

Other risky occupations include racing cars, skydiving, hiking in deserts, and rock climbing.  These activities affect the premiums and eligibility for life insurance coverage.

Lifestyle Factors- If you have a history of engaging in reckless activities such as a pattern of driving under influence, insurers will use that to evaluate your eligibility for coverage. Criminal records, poor driving records and foreign travel to risky nations or war zones, and financial history records are also used to evaluate your eligibility for cover. People who have been associated with risky financial ventures such as flawed IPOs and theft also face some eligibility challenges when seeking cover.

Frequently Asked Questions

How does your risk class affect your life insurance rates?

The more positive your score is, the lower the premiums that you will need to pay.

What happens when I do not want to take the medical exams?

If you do not want to take the medical exam, the next available option is taking the simplified issue underwriting process. In the end, you will get the no medical exam life insurance.

How much coverage will I receive?

The amount of life insurance that you need depends on what you are willing to pay, the risk factors, and the willingness to take the medical exam. In addition, you should know that each life insurance company may have a different approach to analyzing risk factors and evaluating the same. Therefore your life insurance coverage can differ from one life insurance company to another.

Why do insurance underwriters need a motor vehicle report?

Underwriters will also request a motor vehicle report from your state. This summarizes your recent driving history, flagging any tickets, traffic citations, accidents, and DUI or DWI convictions. Risky driving behavior will increase life insurance rates since you are associated with a lower life expectancy.

If you are unsure of how your health or lifestyle will affect your underwriting with a carrier, please call us today at 877-817-2583 or complete the form to the right. \