Before you can buy insurance coverage, you have to qualify by meeting specific requirements. The process is known as underwriting and is similar for buying life, disability, or critical illness insurance.
The underwriting process helps the insurer determine the rate you will pay for your insurance. For example, a cigarette smoker presents a higher risk of a shorter life expectancy than a non-smoker. So, a smoker will pay a higher premium for insurance than a non-smoker of the same age.
The person who assesses life insurance applications is an underwriter. When you apply for life insurance, the underwriter looks at a number of factors based on their underwriting standards and guidelines. These factors include:
- Your current health and physical condition
- Your medical history and that of your family
- Your vocation (racing cars might be fun but actuaries frown on the activity)
- Personal habits (tobacco, alcohol, and/or drug use)
- Your avocations and hobbies (hang gliding, sky diving)
- Your age and gender (women live longer than men but have higher morbidity)
- Your travel history and plans (visits to war zones will cause problems)
The underwriter reviews and evaluates these factors and develops your risk profile. The final premium is based on your risk profile and the risk of death. It is important to know that premiums are not set arbitrarily.
Each insurer sets its own underwriting standards of what it considers as acceptable, insurable risks.
- If you are considered average risk, you will be charged the standard rate.
- If you pose an above-average risk (perhaps you have extra high blood pressure or like to skydive), you may be rated (charged a higher premium).
- If you have a serious medical condition or if there is some uncertainty about your health, you may be declined (denied coverage entirely).
The majority of insurance policies are issued as they are applied for. However, if you are rated or declined, the rating may not be permanent. If you lose weight, bring your cholesterol and blood pressure down, or have additional tests performed, your insurance risk may change and you maybe approved for coverage or have your rating reduced.
We pride ourselves on having excellent working relationships with all of the insurers that we deal with. We have built a reputation of providing underwriters with reliable and complete in-formation to assess applications, resulting in higher-than-average approval rates. We have preferred access to underwriters and can successfully expedite processes when the need arises.
If you’ve had trouble getting standard insurance in the past, call us to see if we can improve your offer, increase coverage options, or simply reduce your rates.