How does the life insurance underwriting process work?

Underwriting gives insurers a clearer look at your health history and background and determines your premiums.

Amanda Shih author photoNupur Gambhir

Amanda Shih & Nupur Gambhir

Published October 26, 2020

KEY TAKEAWAYS

  • Underwriters set your life insurance premiums using information about your health and lifestyle

  • The underwriting process usually involves a medical exam and review of your prescriptions, hobbies, and driving record

  • An underwriter may give you a credit for better premiums if you are actively working to improve your health

When you apply for life insurance, an underwriter evaluates your application details and health information to give you an insurance classification. The underwriter works on behalf of the life insurance company to determine if you should get the premium you were originally quoted. Your classification correlates to how likely you are to die before the end of your policy’s term and your premium is based on that.

This process is called underwriting. All insurance products involve some degree of underwriting to get a picture of who you are based on your characteristics and how they relate to the kind of insurance you’re purchasing. For life insurance, the underwriter looks at data like your health and medical history as well as lifestyle information like your hobbies and driving ability.

Some parts of the underwriting process require action on your part, while others require the input of someone else, such as your doctor. Although underwriting can take several weeks, an insurance broker can make the process easier by shopping around your underwriting results to different providers to get you the best pricing.

The underwriting manual

Every life insurance company has its own underwriting manual. This defines the guidelines that an individual company uses to determine your final premiums.

An underwriting manual will include what service a company’s underwriters should use for ordering an attending physician statement (APS), when they require a prescription history report, how height and weight correlate to health classifications, income restrictions, and more.

Of course, since each insurer has its own guidelines, that means that the other steps of the underwriting process — which tests are ordered, what tools are used, and what all of this ultimately means for your final life insurance premium — vary, too. Everything that follows is a pretty standard set of tools and tasks for an underwriter, but the specifics of what’s used, when, and how won’t be the same across companies.

Step 1: Application quality check

Before life insurance underwriting even begins, the insurer goes through your life insurance application to make sure all of the correct information is there. It’s not uncommon for applications to be accidentally incomplete. Fortunately, unless the missing information is related to medical history, most changes that need to be made to an application won’t slow down the underwriting process.

Depending on the insurer, you may need to do a phone interview as well. You’ll usually need to do this if you only gave the most basic information on your application, like your date of birth, address, and coverage needs, and the insurer needs to dig a little deeper into things like your hobbies.

After that, you’ll go into the official underwriting process. Each of the following checks can add some time to your application, but it’s necessary to finalize the premiums you’ll pay over the life of your policy.

Step 2: Paramedical exam

One of the first steps of the underwriting process involves looking at the results of your paramedical exam. The medical exam is like a checkup with your doctor, except it’s free to you. A medical technician will perform the exam at a lab or your home or work.

The results of your exam are sent to the underwriter. The exam information an underwriter uses falls into three main categories:

  • Basic measurements: Height, weight, blood pressure — the boring things that you get a report on at a typical physical. Your height-to-weight ratio plays a big role in how you’ll be classified and, ultimately, what you’ll pay for your life insurance policy. High blood pressure, which becomes a particular concern as you get older, is also required for setting your premiums.
  • Blood test: You can get a lot of information on potentially risky health concerns with a simple blood test. Heart disease, stroke, diabetes, blood-borne illnesses, and more can all be discovered and analyzed using a few vials of blood.
  • Drug test: A urine test for a full drug panel will alert the underwriter to the use of drugs like amphetamines, cocaine, barbiturates, and more. Generally speaking, drug use makes you riskier to insure and raises your premiums (unless it’s marijuana, which certain insurers treat much more leniently than others).

You can reuse the results of your paramedical exam to apply for other types of insurance, like disability insurance, or even for life insurance from another provider. You’re under no obligation to go with a particular life insurance company just because they paid for your medical exam.

Some insurance companies have policies and underwriting processes that allow you to skip the medical exam. While people with health concerns can be approved for some no exam policies, they’ll have lower benefit amounts and higher premiums. No exam options that offer similar premiums and coverage amounts to a regular term life policy, such as accelerated underwriting insurance, are only available to people who are generally healthy.

Compare and buy life insurance

Compare and buy life insuranceGET STARTED

Step 3: Attending physician statement

If there are red flags coming out of your paramedical exam, the underwriter will order an APS to answer some remaining questions.

An APS is a summary of your medical history from your doctor’s point of view. It provides the status of each condition your doctor is treating and information about the condition, such as how long you’ve been treating it, how long symptoms have been present, and your prognosis.

Say you’re showing signs of high blood pressure. An APS can let an underwriter know that the high blood pressure is a temporary side effect of medication you’re taking and not necessarily indicative of a larger problem. In that way, it complements the paramedical exam by getting into the finer details of your health.

This step can prolong the life insurance underwriting process, adding anywhere from a few days to a few months, depending on how long it takes for a doctor’s office to comply with the request.

Step 4: Medical Information Bureau check

The Medical Information Bureau (MIB) is a trade group that helps insurers share medical data, which helps insurers fend off fraud by seeing where and when you’ve previously applied for life insurance in a general window of six months.

It’s not a bad thing if you’ve applied for life insurance with different providers in the past, but the MIB will show what sort of information you’ve been disclosing on some applications that you may have accidentally left off others. Tested positive for drug use on a previous test but failed to disclose it on your current application? They’ll find out, and your insurer could increase your premiums or deny your application for concealing the information.

Step 5: Prescription check

The underwriter will check all the medication prescribed to you over the past five to seven years. As with the paramedical exam and APS, the prescription check confirms the information in your application: the prescriptions you say you’re on or if you’ve omitted any medication up to this point.

Whether your underwriter requires this step depends on your other medical reports. Life insurance policies with higher coverage amounts may also require a prescription check.

policygeniusSymbolCenter

Compare the market, right here.

Policygenius saves you up to 40% by comparing the top-rated insurers in one place.

Step 6: Motor vehicle report

The underwriter will receive a motor vehicle report, or MVR, detailing your driving history. Just like your health history, your driving history affects your life insurance premiums because it helps determine how risky you are to insure.

An MVR notes driving violations like traffic citations (think speeding or reckless driving tickets), vehicular crimes, accident reports, driving record points, and DUI convictions. It can look as far back as five to seven years.

If you have a tendency to speed or engage in other dangerous driving habits, you’re considered riskier, and your premiums will be higher than someone who has a clean driving record. If you have a recent DUI on your record, you may even be denied a policy.

You can request to see your MVR from your state. It’s also used when determining your auto insurance premiums, so a copy of your MVR can be nice to have.

Step 7: Actuarial tables

Life insurance underwriters use an actuarial table — which is basically a statistical analysis of your life expectancy — to estimate the likelihood that you’ll die at any given age and what risk you pose to the insurer. That risk influences your life insurance premiums. Where you fall on an actuarial table depends on your unique health profile. Your smoking status, any medical diagnoses, family history, and your occupation are all accounted for.

Underwriters look at two separate actuarial tables during the underwriting process:

Mortality table

A mortality table shows the mortality probability of a given population, based on age and gender, and doesn’t account for the many variables that are unique to each health profile. It’s used as a statistical baseline to predict when you’re most likely to die.

Build table

A build table takes your body mass index (BMI) — which is determined by your height and weight — to determine how healthy you are and your life expectancy. A poor build can automatically set your classification to Standard, meaning you’ll pay more for your life insurance policy than someone with a Preferred classification.

The healthier — and less risky — you are, the better your rating on an actuarial table, and the lower your life insurance premiums.

Step 8: Credit system

After the underwriter has gone through all of the tests, tools, and checks needed to set your insurance classification, the last thing they may do is use a credit system to give you a little bump to help you get more affordable premiums.

If a chronic illness results in a Standard (or Substandard) classification, the underwriter’s credit system can make your premium more affordable if you’re actively taking steps to improve your health and undergoing preventative care.

The APS and prescription check let an underwriter know what you’re doing to keep health problems from getting worse, which can boost both your health and your wallet.

Step 9: Your final rating

Unless you pursue a no exam policy, the underwriting process can take anywhere from four to six weeks, and relying on outside sources — like a doctor’s office for an APS — can add time. But once the process is complete, all that’s left is to confirm the premiums and sign the policy to put it in force.

The underwriting process may feel complex, but once you provide some initial information, completing the process is straightforward. Your insurance agent or broker can ensure that you have a smooth experience, and if you need to skip over some underwriting steps, a no exam policy can accelerate your timeline to an offer so you can secure financial protection for your loved ones.

How does the life insurance underwriting process work FAQ:

What is life insurance underwriting?

Underwriting is how life insurers rate the risk of insuring you and set your premiums. During underwriting, they evaluate personal information like your age, health, gender, hobbies, occupation, driving record, and medical history.

How long does the life insurance underwriting process take?

The underwriting process takes four to six weeks, though delays in ordering records or scheduling exams can extend that timeline. No exam life insurance may offer approval in two to three days.

What do life insurance underwriters look for?

The underwriter looks for risk factors that could shorten your lifespan, like a smoking habit, personal or family history of illness, old age, or a skydiving hobby. The more risks you present, the more you’ll pay for your policy.

Insurance Expert

Amanda Shih

Insurance Expert

Amanda Shih is an insurance editor at Policygenius in New York City. Previously, she worked in nonfiction book publishing and freelance content marketing. Amanda has a B.A. in literature and communication from New York University.

Insurance Expert

Nupur Gambhir

Insurance Expert

Nupur Gambhir is an insurance editor at Policygenius in New York City. Previously, she has worked in marketing and business development for travel and tech. She has a B.A. in Economics from Ohio State University.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

Was this article helpful?

thumbsUp
thumbsDown

Compare quotes and get life insurance right

discountPill

Best Price Guarantee

tooltip

Our underwriting experts will match you with the right insurance company and ensure you get the best possible price on your policy. Got offered a lower price elsewhere? Let us try to beat it.

How does it work?

Our underwriting experts will match you with the right insurance company and ensure you get the best possible price on your policy. Got offered a lower price elsewhere? Let us try to beat it.

Life landing phone