Our goal at PolicyGenius to help make the life insurance shopping process easier, so it’s no surprise to us when people ask why the application process is so lengthy. After choosing the policy, sending in your application, and taking your medical exam it can take up to four weeks to get approval. It takes so long that 18.7 million people give up before the end of the process.
What takes so long?
The longest part of the application process is called underwriting. Underwriting is how a life insurance company assesses the risk of taking you on as a customer.
How do life insurance companies assess risk? They look primarily at these things: your age, gender, health history and lifestyle.
On your application, you’ll be asked a number of health questions. Some shoppers see these questions as invasive, but they’re necessary in order to paint an accurate picture of your risk. The application will also ask you questions about your lifestyle activities– i.e., are you a diver, do you partake in extreme sports, are you a bad driver, etc. These questions will also help the life insurance company assess your risk.
It can take up to half-an-hour to finish your application. After that, you’re officially in underwriting.
The life insurance company will ask you to undergo a free paramedical exam. The exam takes about 20 or 30 minutes in your home or office. The examiner will measure your height, weight, blood pressure and pulse, and take samples of blood and urine. This helps the insurer confirm that the information you reported on your application is correct. It could also catch a medical condition you didn’t know you had.
While the medical exam will only take 20 to 30 minutes to complete, it may take a few days to schedule the appointment (depending on your availability). More time can be added to the process if either you or the examiner needs to reschedule the appointment.
If the life insurance company needs more information about your health (either because of something you put on your application or the results of your medical exam), they will request an "attending physician statement" (APS). An APS is a written summary of your medical history from your doctor or hospital.
An APS is an expensive document for the insurance company to request, so they’ll only request if they really need it. If the insurance company decides to request an APS, it can add weeks to the underwriting process. It can take a long time for doctors to produce an APS and it will take more time for the underwriter to examine the document. It's important to note here that doctors' offices are usually a bottleneck at this step.
After your medical exam, your life insurance company might request a phone interview (not all life insurers require this...usually it's required if anything comes up out of the ordinary on your application or medical exam). The phone interview will go over more questions about your lifestyle. If you participate in any "risky" activities, expect to go into detail about them in your interview.
If requested, the interview should take about 15-20 minutes to complete. Expect delays if either you or the life insurance company needs to reschedule the interview.
The average underwriting process takes about three to four weeks to complete. If the life insurance company needs to request an APS, your underwriting process can take up to two months (depending on how slow your doctors' office is).
There are other reasons your approval may be delayed. If you have an uncommon occupation, it may take longer to process your application. If you have filed for bankruptcy in the last year, the insurance company may need to pull a credit report. Each of these will add a week or more to your underwriting period.
If you think that any extraordinary circumstances may delay your life insurance application, be prepared to be patient. Otherwise, you still need to prepare to be patient. The underwriting process is a slow, bureaucratic beast. But, in the end, you'll have an accurately priced life insurance policy to protect your loved ones. And the good news is you won't have to go through this process again for several years!
Image: Mark Seton