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Underwriting is the process of assessing the level of risk presented to the insurer to calculate your premiums. The higher the risk, the higher the premiums. This is similar to how a car insurance company will ask you if you have had any previous license suspensions or accidents to assess your driving behavior and determine your rates.
An underwriting team will evaluate your:
The underwriting process can determine things such as:
Underwriting is the process of evaluating the degree of risk an applicant presents to the insurance company. Every insurer using its own complex underwriting guidelines to determine whether they should accept or reject an application, and to calculate rates.
You’ll have to complete the life insurance application, which asks about your medical and family health history, lifestyle, occupation and driving record. If the insurer feels the application wasn’t filled out thoroughly, you’ll likely receive a call from an insurer to fill in the blanks in order to move on to the next step of getting a life insurance policy — underwriting. This may involve taking a medical exam.
Your insurer will assign an underwriter to your case, who will then assess all the information you’ve provided, as well as the results of your medical exam, if applicable.
As a minimum, the insurer will require you to submit information about your:
Life insurance is based on calculable risk, so your insurer will look a range of factors when assessing your application. These include:
Depending on the policy you’ve chosen, you may need to take a medical exam. During the exam, a medical professional will record your height and weight, and request a blood and urine sample.
They’ll also ask you questions about your health and family history. These conditions pose a higher risk to the insurer, and may lead to an increase in rates:
No. If you don’t want to take the medical exam for whatever reason, you can apply for a policy with simplified underwriting. These are the two main options:
Simplified issue life insurance skips the medical exam and relies on the applicant to answer questions about their medical history. Most applicants are approved, but there are a few “knockout” questions, such as if you’re in a wheelchair.
With guaranteed acceptance life insurance, you can get a life insurance policy without taking a medical exam or having to answer any medical questions. But because the insurer is giving you a policy without knowing anything about your past medical history, premiums will be expensive and death benefits will often be lower than a common life insurance policy.
It comes down to the insurer’s financials. If the underwriters don’t do a good job and quote high premiums, the insurer stands to lose out on a lot of business to their competitors. Similarly, if the underwriters don’t calculate a person’s risk correctly and quote lower premiums, the insurer may lose money by covering high-risk individuals at lower rates.
Life insurance underwriting is the process that determines how risky you are in the eyes of your insurer. It has a direct effect on your premiums — young, healthy people typically get the best rates because their risk is lowest. But even if you have a history of health conditions or risky behavior, you could still find a life insurance policy to fit your needs.
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