When you apply for life insurance, it’s important that you consider how life insurance underwriting may impact your eligibility.
This life insurance underwriting article answers your questions such as:
- What is underwriting?
- How long does life insurance underwriting take?
- What are life insurance company underwriting guidelines?
- What does fully underwritten life insurance mean?
- What is no medical life insurance underwriting?
- What is guaranteed issue life insurance underwriting?
- How does my health affect life insurance underwriting?
- Non-medical factors that affect life insurance underwriting.
- What is financial underwriting in life insurance?
What is Underwriting?
Life insurance underwriting is the evaluation of your current health, medical history, your family’s medical history, tobacco use history, financial history, residency/citizenship, driving history, occupation and avocations to determine your eligibility for life insurance.
The reason why underwriting is necessary for an insurance company is to ensure that underwriting risks are properly classified and priced.
How Long Does Life Insurance Underwriting Take?
Life insurance medical underwriting may take anywhere from a few days to a few months to complete.
Factors that affect life insurance underwriting times:
- Incorrect or incomplete application information
- Delays in paramed exam completion if required
- Medical record retrieval (APS – Attending Physician Statements)
- Significant health issues
The longest delay is typically caused by the amount of time it takes to obtain medical records from your physician. When records are required, most physicians use a records service to copy and send records to the insurance carrier.
When a significant health issue is involved, most files will be sent to a medical director for additional review before a decision is made.
What are Life Insurance company underwriting guidelines?
Each company has its own set of general life underwriting guidelines that are used to determine your eligibility and price for life insurance.
Examples of general underwriting criteria include build charts, blood pressure and cholesterol cutoffs, tobacco usage, etc.
In addition to the general criteria mentioned, if you have a health condition, each company evaluates that condition according to their underwriting rules, resulting in vastly different underwriting outcomes.
What Does Fully Underwritten Life Insurance Mean?
Fully underwritten life insurance offers the most affordable life insurance pricing, the greatest number of companies and products available, and few limitations on coverage amounts. It is the recommended choice for the majority of people applying for life insurance.
The downside of fully underwritten life insurance is that it takes time to complete, you have to complete a paramed exam, and you will be asked lots of questions throughout underwriting process.
What is No Medical Life Insurance Underwriting?
No medical life insurance is a great option if you are in good health, like convenience, do not like paramed exams, and you are in a hurry to complete your life insurance.
Some of the benefits of no exam life insurance include not having to complete a paramed exam, not having to give blood and urine samples, and fast underwriting approvals, including some products that offer underwriting decisions in 10 minutes or less.
The trade off with no exam life insurance is more expensive pricing, limitations in coverage amounts and term lengths, and the fact that this is still a fully underwritten life insurance policy…the only real difference is that no paramed exam is required.
What is Guaranteed Issue Life Insurance Underwriting?
With guaranteed issue life insurance, very few health questions are asked. The main reason why any health questions are asked with guaranteed issue life insurance is to determine how soon the death benefits will be available to your beneficiaries. Some guaranteed issue policies offer death benefit coverage from day 1, while others may offer a graded benefit during the first few years.
Guaranteed issue life insurance is a great option if you are not insurable with traditional life insurance underwriting, and if you are looking for a small policy of $25,000 or less. Guaranteed issue life insurance is expensive, and many policies will only pay a graded benefit during the first few years of the policy.
How does my health affect life insurance underwriting?
Your current health including lab results if going through a paramed exam, along with your medical history will be the main factors when determining your life insurance rates.
Our high risk life insurance information will help you if you have a specific health issue to be considered.
If you’re trying to obtain preferred best rates with a company, your lab results from the paramed exam will most likely determine the rate you receive.
Non-medical factors that affect life insurance underwriting
Non medical factors such as your motor vehicle history, tobacco usage, dangerous occupations, avocations, some foreign travel and your residency/citizenship are all considered when evaluating your life insurance application.
With motor vehicles histories, life insurers pull your motor vehicle history for review. If you had a speeding ticket, it’s no big deal…but if you had a series of moving violations it could affect rates. Most companies hold any DUI history against you for 5-10 years depending on the company.
For tobacco usage, companies look at the type, quantity, and duration of time as a tobacco user. If you quit, non-tobacco rates for ex-cigarette smokers are typically available 12 months after you quit. All other types of tobacco use have non-tobacco rates available all the time.
What is financial underwriting in life insurance?
Financial underwriting evaluates your application to determine if the amount of life insurance you seek is appropriate.
Each company has its own set of guidelines that are used to determine how much life insurance is available to you.
Along with the general financial underwriting guidelines, insurance companies want to know the source of the premiums, especially with any cash value policies.
Life Insurance Application
Once the life insurance company you choose receives your application, the evaluation begins. Your application is the primary source of underwriting information and will become part of the policy itself.
As part of underwriting, the insurance company will obtain information from the following sources:
- The paramed exam you complete, including lab results.
- Medical records from your physician(s)
- Prescription database review
- MIB – Medical Information Bureau
- Motor vehicle records, a credit check, and in some cases may require an inspection report…aka a phone interview.
This information is gathered by the insurance company for the purpose of determining if you are eligible for life insurance with the company you apply, and if the answer is yes, at what rate they will charge you.
Our Life Insurance FAQs will provide you with detailed explanations of insurance related terms.
The Life Insurance Underwriter’s Point of View
While each life insurance company has its own underwriting criteria, every life insurance underwriter looks at the following information before making their underwriting decision.
- Build – What is your height and weight.
- Tobacco – Do you currently use tobacco? What type and how often do you use tobacco?
- Medications – What do you take, why do you take it, how much and how often?
- Medical History – Have you had any health issues in the past or present? If yes, what was the treatment?
- Blood Pressure and Cholesterol – What is your average blood pressure, total cholesterol and ratio?
- Family History – Is there any history of parents or siblings having heart disease, cancer or diabetes?
- Alcohol & Drug Abuse – Is there any history of abuse?
- Driving Record – Any history of DUI’s or moving violations?
- Occupation – What is your occupation? Do you travel to foreign countries for your job?
- Avocation – Do you scuba dive, mountain climb, race cars, motorcycles, sky dive, fly a private plane, etc?
- Residence – Do you live in the U.S. year round, live in other countries?
Life Insurance Underwriting Decision
After your file has been reviewed, one of the following underwriting decisions will be made:
Approved As Applied – Good news! You received the underwriting rate you were expecting.
Approved Other Than As You Applied – If you receive approval at a rate class less favorable than expected, the underwriter will provide a reason why you were approved at that rate.
Life insurance underwriting is negotiable…especially true when life insurance table ratings are involved. Underwriters follow guidelines when making their offers. There are times when the underwriting offer may be negotiated for a better deal. We are constantly pushing back for better offers when we believe the underwriter didn’t give you the best offer available.
We’ll review the offer with you and decide if it is still the best offer available, or if we need to go shopping to a new life insurance company.
Postponed – Sometimes underwriters will postpone offering life insurance to you if there was a recent health issue. surgery, completion of treatment, etc. Keep in mind that even if one company postpones you, we may be able to find life insurance elsewhere for you.
Declined – Sometimes, the underwriting department will decline to offer coverage to you. When this happens, we will find out as much detail as possible. We will share this information with you, and decide our next steps together. Depending on the reason for the decline, we may be able to find coverage elsewhere.
Life Insurance Underwriting Questions & Answers
How much coverage should you buy?
You should buy enough life insurance to meet your needs and your budget. We’ll help you with a life insurance needs analysis, and whether you need small policy, a million dollar life insurance policy, something more, or something in between. We’ll show you the options and pricing available to help you find affordable life insurance to meet your needs.
Will you qualify for preferred best rates?
It’s possible, but keep in mind that only about 20% of all applicants will qualify for the preferred best rate classes. The guidelines for preferred best rates are strict and rarely will an exception be granted. We’ll review the guidelines with you upfront to make sure you will qualify.
Does my family’s medical history affect my life insurance rate?
All life insurance companies ask about your parents and siblings medical history. Parental family history has a greater negative impact. Cardiovascular issues are more difficult to deal with than cancer or diabetes. The good news is that we know which companies will be best based on your family’s medical history. Some companies will disregard family history if it was a gender specific condition, or you’ve reached the age of 60 or older.
Speaking of parents, can I buy life insurance for my parents?
Buying life insurance for parents is actually pretty common, whether it is to help with final expenses, provide something to the kids and grandchildren, estate planning and more. Take a look at our guide to parents life insurance.
Do medications for blood pressure and cholesterol affect life insurance rates?
Most competitive companies do not care about cholesterol medication, but are more interested in your cholesterol ratio and total cholesterol. Many life insurance companies will still allow their best rate if you take blood pressure medication. The key fact to know is that some companies require lower blood pressure averages than other companies.
Do I have to pay tobacco rates if I smoke cigars?
Cigar smokers always get non-tobacco rates. The best rate for you will depend on how often you smoke cigars and whether or not you provide a negative urine specimen. It may be possible to obtain the best rate classes for occasional cigars.
How about cigarette smokers?
We have a company that will offer you non-smoker life insurance rates for the first few years, but only if you buy a universal life or whole life policy. We have another company that will sometimes offer non-smoker rates for the occasional cigarette smoker.
What About Health Problems?
- Life Insurance for Diabetics – Most life insurance companies will add a Table Rating to your life insurance rates. Find out which life insurance companies specialize in Diabetes underwriting and may offer you standard rates or better. We’ll show you what life insurance companies look for to ensure the best results for you.
- Life Insurance for Heart Conditions – Why pay double or triple when there are some life insurance companies that may give you standard rates! There are steps you can take to obtain more favorable life insurance underwriting rates if you have had a heart problem.
- Prostate Cancer history? – We have life insurance companies available that may consider preferred rates for low stage cancers. Others may consider you for their standard plus rates. If you are a prostate cancer survivor, let us help you. We can also help you if you have had other types of prostate disorders.
- Breast Cancer, Skin Cancer, Bladder Cancer, plus many other types of cancer. Does skin cancer affect life insurance rates? There are niche life insurance companies for each one of these underwriting conditions. We’ll get you to the right life insurance company.
- Do You Jump from Planes or Fly them? Find out which life insurance companies will treat you right, and which ones will charge you an extra $250 for every $100,000 in coverage you get.
- Asthma, Depression, Ulcerative Colitis, Thyroid problem, liver disorders, Parkinsons, Epilepsy, Stroke, mini stroke TIA, anxiety, and more. There are niche life insurance companies for all of these. We’ll get you to the right life insurance company every time.
- Bipolar Disorder – We have a number of life insurance companies available for bipolar disorder. We are able to help insureds with Bipolar Disorder 1 and Bipolar Disorder 2.
At LifeInsuranceAdvisors.com, we’ll help you find the best life insurance rates based on your individual situation.
Michael J Horbal is the owner of LifeInsuranceAdvisors.com, an independent life insurance agency specializing in high risk life insurance. Since 1998, Michael has helped thousands of consumers with their personal, business, and estate planning life insurance needs. Check out our life insurance blog for detailed articles to help you.