How life insurance underwriting works • Benzinga
Getting a life insurance policy can be a process. Familiarizing yourself with the underwriting process ahead of time can make shopping for life insurance easier, as you will know what to expect.
Get started now with Benzinga’s overview to help you understand the process.
What is subscription?
Underwriting is a process that takes place after taking out a life insurance policy. During the underwriting process, the insurer will review your application and confirm your eligibility for the policy and your policy rate.
Who takes care of the life insurance underwriting?
If you work with an insurance broker, they should be able to keep you updated on the status of your application throughout the underwriting process.
What does the life insurance underwriting process look like?
The process of underwriting a life insurance policy involves several steps. Here is a breakdown of the steps followed by most insurance providers.
The first thing a subscriber will do is check with the MIB group database. The MIB Group helps insurers gather information about a person’s risk and eligibility for life insurance, as well as other insurance products such as disability and health insurance.
MIB Group information is gathered from health and life insurance apps, so if you’ve ever applied for a health insurance policy, it probably already has information about you. This information may include medical history data, hazardous hobbies and your driving record.
The underwriter will use the MIB data to help verify that the information in your application for life insurance matches the information you have already submitted when applying for other insurance products. If the information is inconsistent, the underwriter and the insurance company can further examine your medical history to confirm the details.
Checking the quality of applications
The insurer will probably call you for a 15 to 30 minute telephone interview. During this call, the insurer will review your application with you to ensure they have all the information needed to complete the underwriting process. You may be asked questions about your medical history and background during this call.
If the life insurance policy you applied for requires a medical examination, that will be the next step. The medical examination is carried out by a medical technician and paid for by the insurer. It’s similar to a routine checkup with your doctor — the medical technician will check your blood pressure and record your height and weight.
You will also undergo a blood test to check for medical conditions such as diabetes and heart disease and a urine test to check for drug use. The results of your medical examination are sent to the underwriter and will be used to determine your eligibility for life insurance coverage.
One important thing to remember here is that you can reuse your medical exam results to purchase another life insurance policy. You are not required to take out a life insurance policy with the insurer who paid for your medical examination.
Attending Physician’s Statement
If there are concerns about your medical examination, the underwriter may order an Attending Physician’s Statement (APS). In the statement, your doctor will summarize your medical history and provide details of the underlying cause (if known) of the insurer’s concerns.
Verification of prescriptions
As part of your medical history, the insurer may want to know about all the prescriptions you have received over the past few years. Prescription checks are not always necessary, but can be used as another way to confirm the information you provided on your application.
Motor Vehicle Report
Insurers and underwriters are also interested in your Motor Vehicle Report (MVR). This report contains information about your driving history and goes back up to 7 years. If you’ve had traffic citations like a speeding ticket, accident report, or DUI conviction, that will show up on your MVR. The MVR will primarily influence your insurance premium – if you have a good driving record you will likely receive a lower premium than someone with a concerning report. However, if you have something concerning like a recent DUI on your record, the insurer may deny your application for a life insurance policy.
Actuarial tables are statistical analyzes of your life expectancy. These tables are carefully calculated based on the mortality rates of certain populations throughout their lives. Factors such as your family history, medical diagnoses, and occupation can determine where you stand on an actuarial table.
Underwriters will look at the mortality table to get a statistical basis to predict when you are most likely to die. It may sound morbid, but life insurers need this information to determine the risk of insuring you. Underwriters will also look at a construct that uses your body mass index (BMI) to determine your health status. This table is also used to predict your life expectancy.
Once the subscriber has completed all of the above steps to determine policy and premium eligibility, they can perform a credit check. This can help you get a more affordable premium for your life insurance policy.
Final grade confirmation
Finally, the underwriting process will end with the final rating. It is at this time that the insurer confirms the premiums and authorizes the implementation of the policy.
How to improve a life insurance application?
There are a few things you can do to try to get the best rates on a good life insurance policy. The easiest thing you can do is research insurers. You’ll want to find one with good financial strength ratings and get quotes if you can to find the insurers that offer the most affordable policies.
The other thing you can do is work out the factors that will influence your policy. It will take longer, but it can help you in the long run.
Preparing for the medical examination
Although you cannot change your medical history, there are things you can do to improve your medical exam result. It’s a good idea to abstain from alcohol for a few days before the exam and to skip coffee the morning of your exam.
You should also drink plenty of water in the days leading up to your exam to ensure you are properly hydrated. Relaxing the night before the exam and getting a good night’s sleep can help lower your pulse and blood pressure.
On the day of your exam, you should wear light clothing to ensure you get an accurate weight measurement. You’ll also want to ask if you need to fast before your medical exam, as some blood tests may require it.
Eating a healthy diet and exercising regularly can improve key indicators of your health, including blood sugar and cholesterol levels. It can also improve your BMI, which is heavily factored into the underwriting process.
Work with your doctor
If you have any health issues, be sure to contact your doctor and follow their advice. Underwriters will be aware of your medical conditions, and if your doctor confirms that you are taking steps to manage them, it may help your claim.
Work on your credit
To help you get the best possible premium, you can take steps to improve your credit before you buy life insurance.
Request a reconsideration
If you previously submitted a life insurance application, but have since made changes, you can ask your insurer to review your updated records. Updated medical records and a new medical exam can help you qualify for a lower premium.
Work with an agent
If you use an insurance agent, you can ask their advice on what they think might be useful.
Compare life insurance
Whether you’re ready to buy life insurance now or are gathering information to use in the future, it’s a good idea to know the main life insurance providers.
Use these providers to start your search for the best life insurance coverage.
When should I apply for life insurance?
To get the best premiums, it’s a good idea to buy life insurance when you’re young and healthy. Keep in mind that the application process usually takes around 6 weeks, so you won’t receive coverage immediately after applying.
Now that you know what to expect, you can start looking for coverage at any time.
Frequently Asked Questions
What are insurers looking for?
What are insurers looking for?
Insurance underwriters first want to make sure the information on your application is correct. They look for factors that will determine whether you qualify for a life insurance policy, including your health and driving record. They will also look for factors that may determine the amount of coverage and the premiums you are entitled to.
Is insurance underwriting a dying career?
Is insurance underwriting a dying career?
According to US Bureau of Labor Statistics, “employment of insurance underwriters is expected to decline by 2% from 2020 to 2030”. However, job postings should always replace insurance underwriters changing careers or retiring.