Understanding underwriting

Everything you need to know about the life insurance underwriting process

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Alani Asis

Alani Asis is a personal finance writer with nearly three years of experience in the space. She has worked with leading publications and brands cover…

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Ross Martin

Manager, Content Quality

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  • Licensed Insurance Agent — Property and Casualty

Ross joined The Zebra as a writer and researcher in 2019. As a licensed insurance agent, he specializes in writing insurance content to help shoppers…

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Susan Meyer

Senior Editorial Manager

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  • Licensed Insurance Agent — Property and Casualty

Susan is a licensed insurance agent and has worked as a writer and editor for over 10 years across a number of industries. She has worked at The Zebr…

The life insurance underwriting process is like a puzzle. You provide the puzzle pieces in the form of information. The more information your insurance company gets from you, the better it can assess your risk level and price your insurance premiums accurately.

If you're purchasing life insurance coverage for the first time, this guide will go through everything you need to know about underwriting from the application process to your policy's decision and offer.

What is life insurance underwriting?

The life insurance underwriting process determines your eligibility for coverage, which insurance products you will be offered and your rates. A life insurance underwriter will gather and analyze the information in your application, medical exam and other personal or medical records to assess your insurance risk.

The underwriting process can take several weeks. However, with policies like simplified issue insurance, you can forgo a medical exam for an accelerated underwriting process.

How does the life insurance underwriting process work?

If you're in the market for a life insurance policy, here's what you should expect during the underwriting process.

Step 1: Complete a life insurance application form

Before underwriting begins, you must undergo the life insurance application process. You should have the following information when completing the form.

  • Personal information: You must provide your date of birth, name, address and contact information.

  • Health and medical history: Your insurer will need your height, weight, any preexisting medical conditions, medications you're taking and any surgeries or hospitalizations you've had. Things like your BMI (body mass index), blood pressure, cholesterol may come into play here.

  • Family's medical history: If your family has been diagnosed with a mental or physical illness, insurers want to know because it increases the likelihood you develop it too.

  • Lifestyle/occupation: Participating in high-risk activities (are you a skydiving enthusiast?) or working in hazardous jobs can increase your risk factor to insurers. Other factors that might come into play are your drug use or tobacco use, criminal history and history of risky behavior like DUIs.

  • Policy details: Your insurance company will inquire about the type of policy you're looking for (term life insurance or permanent), the length of the coverage and the death benefit amount. It may also ask for your designated beneficiary and their contact information. 

Step 2: Complete a phone interview

A life insurance agent will call you a few days after submitting your application. A phone interview takes place to verify the lifestyle and health information on your application, fill in any incomplete answers, and ask additional questions.

After the phone interview, you'll usually be asked to schedule a date for your medical exam, if applicable. Not all insurance carriers require the medical exam, depending on your age and answers during the application process.

Step 3: Take a medical exam

Underwriters use medical examinations to determine your susceptibility to illnesses or injuries, indicating how likely you are to pass away soon. This information is used with underwriting guidelines to set your life insurance rates.

After your phone interview, a medical technician will conduct the examination at your home or a medical facility. The exam will typically consist of various body measurements, blood work and urine sample. To prepare for the medical exam, your insurance company may recommend you fast before a blood test or avoid caffeine and nicotine.

Step 4: Application quality check

Whether you have a diagnosis for a preexisting condition like high blood pressure or have a high-risk lifestyle, you'll want to be transparent in your application. Insurance companies have a contestability period. This period typically lasts for two years and allows your insurer to deny your claim if you've falsified information on your application. 

Application quality checks will identify discrepancies in your application. Accurate risk assessments also ensure that insurance companies place you in the right risk class and in turn offer you a fair life insurance quote. Underwriters will use these documents to verify the information on your life insurance application

  • Attending physician's statement (APS): A report written by your doctor that details your medical history and current health status

  • Medical Information Bureau (MIB): Underwriters check this database for previously submitted insurance applications and reported health conditions

  • Motor vehicle report: Most insurance companies will check your driving record. If you have a driving history that demonstrates recklessness and serious traffic violations, that will affect your rates. 

  • Prescription history: Insurers will check your previous prescription records to see current and past medicine usage. 

  • Credit history: Insurance companies will view your credit score to see if you can make payments. While a poor credit score won't bar you from getting coverage, it may result in higher premiums

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Step 5: Analyzing the information

Underwriters use actuarial tables to analyze your application, create a risk profile and predict your life expectancy. Underwriters use two types of actuarial tables: 

  • Mortality table: Calculates an individual's life expectancy based on data obtained from a particular population, age and gender.

  • Build table: This table illustrates the average weight for your height. It indicates to underwriters your susceptibility to developing health conditions such as obesity, heart disease or diabetes which may lead to early death.

Step 6: Get placed in a risk classification

Life insurance, like all types of insurance, is all about risk assessment. Insurance underwriters use the following risk classifications when underwriting your policy:

  • Preferred plusThis category poses the least risk to life insurance companies; therefore, applicants can expect the lowest rates. Preferred plus policyholders are generally young, have very good health and have a low-risk occupation and lifestyle. 

  • Preferred — These applicants may have a minor health issue. However, they typically have good health, a low-risk lifestyle, and a good family health history

  • Standard plus — Applicants in this category tend to have average health, participate in a moderate-risk lifestyle and may have a history of minor family health problems. Applicants in this category may see rates on par with the insurance industry average. 

  • Standard — This group of applicants tends to be riskier to insure due to severe family health issues, past health conditions or involvement in high-risk activities. However, they tend to have average health. People in this category should expect higher rates than those in the standard plus category. 

  • SubstandardSubstandard applicants may participate in high-risk activities, have significant health problems or have serious family health issues. High-risk applicants can expect more expensive premiums than applicants in the preferred to standard category. 

FAQs — Life insurance underwriting process

Here are some common questions about the underwriting process.

The underwriting process evaluates your application, medical exam and other background information to assess your risk when it comes to insurability. 

The most critical factor in underwriting your policy is your current health. If you have a severe health condition, the likelihood of premature death increases. The amount of coverage you can afford may be less in that case.

Some red flags underwriters pay attention to are smoking or drug abuse, serious health issues, risky occupations or lifestyles, poor financial stability or a criminal background.