Life Insurance Underwriting
Life insurance is a business, and like all businesses, they need to make smart decisions in the based on risk and reward. Every time a life insurance provider takes on a new policy, they are embracing the risk that the policyholder may die during the coverage. Rather than leave this chance up to luck and the policyholder’s life decisions, the insurance companies evaluate the life expectancy of each individual potential policyholder. This evaluation, called life insurance underwriting, keeps risk at a minimum since underwriting allows life insurers to scan for high-risk policies and either decline the coverage or charge more for the coverage. It is an underwriter’s job to look at many parts of your livelihood to deliver an informed decision to the life insurance companies.
So what does an underwriter look at when evaluating your insurability? Life insurance underwriting will look at details both in and out of your control. Understand that your immediate health isn’t the only piece of information relevant to issuing you a life insurance policy. A healthy applicant’s age, height, weight, occupation, income, marital status, and the number of children you have are all factors that are reviewed during the life insurance underwriting process. This process is designed to determine your life expectancy and thus the risk the life insurance company may take on.
Life Insurance underwriting will also look at your hobbies and habits. If you are a smoker, alcohol dependent, chronically ill from poor health habits, frequently visiting the doctor for preventable ails, traveling to high-risk countries, or even a driver with a poor vehicle operator’s record, then these choices will deem you to be riskier to insure.
Life insurance underwriting isn’t all doom and gloom. It may seem like insurance companies are looking for any and all reasons to mark up your premium or reject you, but they also look at what you actively do to make you more insurable. Underwriters look through your medical reports and prescription histories and can tell if you are sick or sick prone from poor habits.
They can also tell if you are healthy from good habits. Eating healthy and exercising, being a nonsmoker, controlling your alcohol use with responsibility, and driving safely are all ways you can be appealing to life insurance companies. If you haven’t already started a healthy lifestyle, it’s still a smart idea to make the steps toward it. Life insurance underwriters will acknowledge your active change toward being healthy and that can go a long way. Proactivity could be the difference between a high premium and a low one or being insured and not insured at all.
Each Company is Unique
Some companies might see you as high risk, even when you are doing the best you can to appear low risk. Each life insurance company has their own unique view on each of the various factors they take in consideration during the life insurance underwriting process. Thus, underwriters evaluating on behalf of different insurance companies will look for different risky behaviors and weigh their findings differently. If you are unhappy with your offer for coverage because your insurer saw you as high risk, shop around for more policies. Although high-risk applicants are generally not in life insurance companies’ interest, some of them have specific programs and deals for high-risk applicants and specialize in long-term solutions for that.
We recommend consulting with a seasoned life insurance professional to see which company has the best life insurance underwriting process for YOU!