More on Life Insurance
More on Life Insurance
Why confirming your identity is so important to insurers.
Published November 30, 2018
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When you apply for life insurance, you're asked to share some pretty sensitive information about yourself, including your Social Security number (SSN) and driver's license number.
This can be a big ask for most people. Your Social Security number in particular is one of the primary means by which the government can identify you — which means it's an attractive target for thieves. We’re all taught to safeguard our SSNs, so it can be jarring to be asked to share it.
But life insurance companies need to verify your identity in order to give you risk rating and verify your policy, and your SSN and driver's license numbers are an integral part of their ability to do that.
There are three main reasons life insurance companies require your SSN:
1. To confirm your identity and prevent fraud It’s one way to make sure you are who you say you are.
2. To check the Medical Information Bureau (MIB) The Medical Information Bureau (MIB) keeps records of all of your life insurance applications. It's a cost-effective way of weeding out bad actors — like those who misrepresented themselves to another life insurance company — early on. The MIB uses Social Security numbers to track this information.
3. To check with any prescription drug databases in your state It's not uncommon for an applicant to underestimate how a previous or managed health condition can affect the risk profile that the insurer uses to price a policy. Checking a prescription drug database is a quick way for the insurer to look for this sort of data that an applicant might honestly forget to mention.
4. To check your credit report Insurance companies may also check your credit report for any recent bankruptcies or other anomalies on your credit report to help them estimate the level of risk.
Read more about your credit report and life insurance.
5. To check your criminal record If you’ve indicated that you have criminal record in your past, the insurer might use your SSN to check whether there's anything recent that could affect the risk profile.
The Social Security number has become a reliable and universal way to verify your identity. In fact, it’s tied to your identity throughout industries, for everything from your grades at university to checking your credit to checking court records and recent life insurance applications.
There's technically no reason that each group can't use an internal identification system instead of Social Security numbers. But many industries use the SSN as a catch-all identifier, and the insurance industry is one of them.
The insurer uses your driver's license number to check your driving record for any moving violations, accidents or license suspensions.
As with the prescription drug database check mentioned above, this is a way for the insurer to find things that have been proven to affect an applicant's risk profile but that the applicant might not think is important.
Life insurers, long-term disability insurers, auto insurers and more will use motor vehicle reports, or MVRs, to see what sort of dings against your driving record, like speeding tickets or DUIs, you've accrued over the years. Because insurers want to see how risky you are to insure, they'll use these to determine your final life insurance rates.
Your driver's license number may also be used along with your SSN to help verify your identity, since most states require your SSN before issuing you a driver's license.
Yes. And in turn, you can refuse to provide it. And in turn again, the insurance company can decline to sell you a policy.
In other words, both parties are basically free to deal with this request however they like, so long as no federal laws are violated. This is why the advice you find online about guarding your Social Security number encourages you to push back and ask why it's needed instead of arguing about the law.
There are some times when you're legally required to give your SSN, specifically with some government agencies.
For life insurance, it means the insurer can't confirm you're who you say you are, and it can't accurately price the mortality risk of providing coverage for you. As a result, it won't be able to price or sell a policy.
If you don’t have a driver’s license because you don’t drive, then you can still apply for life insurance. But if you don’t have a driver’s license because it was suspended or revoked, then you’re going to have a hard time buying life insurance.
Though many life insurance companies require a Social Security number to apply, there are some that will accept other forms of identification.
For example, holders of some visas and green cards may apply for life insurance, though each carrier has its own regulations for accepting applications. Read about the best life insurance companies for visa and green card holders.
If you are a visa holder or a green card holder and you don’t have an SSN, you may be able to apply for life insurance using your Individual Taxpayer Identification Number (ITIN).
Logan Sachon is the co-founder of The Billfold, a groundbreaking personal finance site for millennials that was named one of Time's 25 Best Blogs of 2012. Her work has been published in New York Magazine, Glamour, The Guardian, BuzzFeed and more.