What is Life Insurance Underwriting?

What is Life Insurance Underwriting
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    Ok, so what is life insurance underwriting? This is an important question that many life insurance shoppers should be asking. Basically, it’s when companies implement a screening of potential insureds using risk evaluation and premium-setting processes. It’s completely necessary and a fundamental system of insurance underwriting.

    You have probably done all your homework by searching the top rated life insurance companies. You may have even compared and understand your life insurance quotes and now you’ve found one you want to apply for.  But are you going to qualify for the rates that you’ve spent all this time and energy researching?

    During the application, someone’s job is to decide if you will get the actual rate you are applying for by reviewing your health information.  Most people, at this point, will have several questions that we’d be glad to answer for you.

    life insurance help
    • What is Life Insurance Underwriting
    • Who actually makes the decision on your policy rate?
    • What is the process?
    • How much information are they looking for?

    What is life insurance underwriting?

    Life insurance underwriting refers to the process of evaluating the risk of the proposed insured. This evaluation process assesses the risk of the proposed insured to the company they are applying to.

    The underwriter will determine how much the proposed insured will have to pay based on the health class they determine they qualify for.

    The life insurance underwriter

    First off, an underwriter works for a life insurance company and it’s their job to figure out how risky a potential customer might be.  They also determine if the potential customer should still be alive or will they die by the end of the policy’s term.

    Insurance companies hire many underwriters for all their products to collect information and then set the appropriate premium rates for everyone. In the United States, there are more than 100,000 life insurance underwriters employed by insurance companies.

    Life insurance application checklist

    Understand, that before the life insurance company sends off your information to an underwriter, they will go through your application and make sure all information is correct.  Your application is very important and only the first step to getting an insurance policy and therefore it’s critical all information is correct.

    They will go over the application and make sure everything is in order and you have completely filled out all requirements.  Sometimes people get excited or overwhelmed and can very easily miss a question or two, it’s actually a very common occurrence.  Usually, unless it’s questions concerning your medical history, these missed questions will not slow down the underwriting process.

    It usually depends on the insurance company, but most will need to have a phone interview along with your initial conversation with an agent.  This is usually required if your application only provided very basic information such as your date of birth, your address, how much coverage you need, etc.  

    The life insurance company will want further information such as further information regarding your health, occupation and your hobbies or activities. For instance, if you jump out of airplanes you are will be considered a higher risk than if you play golf.

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    Underwriting begins

    After these steps, this is when the underwriting process starts kicking in.  This is a very important part of getting the premium price you are looking for and is the deciding factor.

    All life insurance companies have their own underwriting manual which lays out the guidelines they must follow to determine a potential customer’s final rates.  The underwriting manual will list guidelines for ordering APS (attending physician statements), securing medical reports, checking medication databases, and anything else needed to determine the potential customer’s overall health.

    You might be asking, “Do all life insurance companies look at you the same?” This is a question that most shoppers should be asking because companies and their underwriters look at you differently.

    Underwriting guides are not the same across the industry. Some companies are going to be more strict with their underwriting compared to others. Because all insurance companies have their own guidelines, all the steps for the underwriting process will vary including what tests should be ordered, what tools should be utilized, and will dictate your final life insurance health class rating.  

    The methods of gathering these details are fairly common across the industry. However, the specific qualifying guidelines that will be used will not be the same from one company to another.

    Life insurance medical exam

    You will often be required to participate in a medical exam before getting approved for a life insurance policy. The paramedical exam, which is very similar to the one you would get from your doctor at an annual checkup.  The difference, you have this performed in the privacy of your home or at work instead of your doctor’s office. This exam will be performed by a nurse or technician.

    So just what is the insurance company looking for from these exams?  

    This information falls into 3 categories:

    1. Basic data

    This is really pretty simple, they will take your height and weight, blood pressure, and other basics that are typically performed by your doctor during a physical exam.  Your height to weight ratio can play an important role in how you will be categorized and what you will pay for your policy. High blood pressure can be a concern, especially as you get older, but is mandatory for setting your rates.

    2. Blood sample

    I don’t know anyone who likes having a blood test performed but a great deal of valuable information can be revealed through a blood test including any underlying health issues you might have.  A blood test can reveal:

    3. Urine sample

    This will include a urine test that will alert the insurance company of any drugs you might be taking such as cocaine, barbiturates, amphetamines, etc. This is because drug use can make you a higher risk and will raise our premiums.  

    Please Note: The only exception is Marijuana which at the moment is hovering between somewhere in between legal and social areas of insurance guidelines.

    Attending Physician Statement (APS)

    This statement may be required if there are additional questions that need answers.  An APS is a summary of your medical history from your doctor’s viewpoint and offers very basic health information.  An underwriter might want this information even though you just completed their physical exam. The attending physician statement can let an underwriter know if you are showing signs of high blood pressure and whether it’s a temporary side effect from a medication you are taking and not leading to a bigger problem.

    In general, an APS will let the underwriter see a full picture of your health so they can make the right decision on your classification.  Unfortunately, this step can slow down the entire process by adding anywhere from a few days to a few months. This time frame is usually caused by the response time from your doctor’s office to comply or whether they use a third-party record-keeping company which will add even more time to the process.

    The Medical Information Bureau (MIB)

    The MIB is a trade group that helps insurers share the needed medical data required for accurate underwriting.  The database helps providers prevent fraud by showing when and where you might have applied for life insurance before, usually in a 6-month window.  It will also reveal if you have applied for insurance with different providers in the past and what information you had provided them but did not put on your recent application.

    If you had a drug test that showed positive but failed to disclose this information on your current application, they will find out.

    Prescription history

    Insurance companies want to know what medications you’ve been prescribed and the reasons why they were prescribed. This medication background check is not always performed but can be if the underwriter needs it.  It will check for all medications you have been prescribed over the past 5 to 7 years.  It will make sure you are on the prescriptions you say you are or if you have omitted any of them.  Again, this does not always happen but is more likely to take place for a higher coverage policy.

    Motor Vehicle Report

    This might seem way off base but actually, your driving history plays a big role in your life insurance rates.  This report will document any driving violations such as speeding tickets, vehicular crimes, accidents, driving record points, DUI convictions, etc.  

    This report will go back 5 to 7 years. This report gives the underwriter an overall picture of your potential risk and whether you will still be alive at the end of the term of your policy.  Let’s face it, if you have a habit of drinking and driving or engage in other dangerous habits, you are riskier and your rates will be much higher than someone who is a safe driver.

    The good news, if you want to see the report that the underwriter will be looking at, you can request it from your state’s MVR so there will be no surprises.  You might have to pay for the copy but it would be well worth your time and money.

    Mortality tables

    As morbid as this might sound, underwriters really like these life tables.  They show the mortality probability for a given population that is usually based on age, gender, and any other categories being equal.  These statistics will state the most likely time period you will die.

    The tablet takes your BMI (body mass index) based on your height and weight and then takes information that is relevant in order to determine your classification.  These tablets are created on your unique circumstances and once it’s done, the underwriter is just about ready to report your final classification and your premium. 

    Life insurance credits

    Once is all said a done by the underwriter, the last step may be to use a credit system to give you an added boost to help give you a better rate.  For instance, if you have heart disease, your rating will be standard or worse. The credit system can bump you up a class, making your premium more affordable.

    In many cases, this will depend on whether you have taken positive steps toward preventative care for your given condition that has harmed your rating.  The APS and Prescription Check will let the underwriter know how you are addressing your health issue to keep it from becoming worse.

    You’re approved! [hopefully]

    The final step is getting your approval. The underwriter has finally completed every step and has approved you for your life insurance policy with your health class rating. This rating will let you know what your premium will be.

    The whole underwriting process took anywhere from 3 to 8 weeks, depending on what information was required and any outside sources needed such as your doctor’s office delivering the APS in a timely manner.  The only thing left to do is sign the policy to put it in force and your family is totally protected.

    In case you are unaware, once you have been approved for your premium, it’s locked in. You do not have to go through another underwriting process again throughout the life of your policy!  You can now breathe a sigh of relief because you now have provided financial protection for your loved ones.


    Most people are aware that life insurance is a very important decision everyone should make to protect loved ones in case of death or even to pay off various bills should they retire and lose income.  Sadly although most people are aware of the importance, there are millions of people who are still sitting on the fence and not taking any further steps.

    Getting a life insurance policy is not that difficult and is not as scary as some people believe.  Getting a much-needed life insurance policy starts with getting expert life insurance shopping advice. This starts with comparison shopping, getting with an online agent that can help you make the right choices for you and provide you with the very best companies to get your policy from. 

    Want to learn more? Please read our post shopping guide,13 Steps Showing Exactly How to Buy Life Insurance for life insurance buying tips as well as our Life Insurance 101 learning center resource.

    We hope all this information has proven to be a great help to you.  If you have any questions or concerns, we are here to help out so please ask away!

    Michael Quinn

    Michael Quinn

    Michael is a licensed life insurance agent, expert & owner of Life Insurance Blog. LIB has helped thousands of shoppers understand life insurance and secure affordable coverage.

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