Once you submit a life insurance application, the insurance company will begin underwriting. To determine if you’re eligible for coverage, your risk profile, and your premium amount, underwriters will look at various factors, including age, gender, lifestyle, and health history. For example, if you’re a smoker, you may pay higher rates for coverage than if you’re a non-smoker. To help make applying for coverage smoother and less stressful, it can be helpful to understand what’s involved and the common misconceptions that surround this procedure.
The underwriting process can vary depending on the insurer, death benefit applied for, and type of coverage, but on average, it can take two to four weeks. The process can be much quicker for certain types of coverage, like guaranteed issue and simplified issue life insurance. To help streamline the underwriting process, gather all your health information and list of prescriptions before you begin your application.
Providing accurate and complete information on your application will help speed up the application process and help you avoid any fraud issues. As you complete each application section, include as much detail as possible and be honest about your health, smoking status, and hobbies.
For certain types of life insurance policies, bloodwork or a medical exam is not required. “The more comfortable companies can become using other sources to assess risk, the less frequently medical exams will be required,” says Sammons Financial Group Chief Underwriter Chris Regione. “That said, when a medical exams may still be needed it is critical for risk assessment.”
Even if you have a medical condition, you may still be able to get approved for life insurance coverage. “Many clients with one or more pre-existing conditions could still qualify for life insurance,” states Regione. “Understanding pre-existing conditions and the severity of these is critical to underwriting . Companies take a holistic approach to risk assessment. This means they are looking for ways to offer coverage within the company’s risk appetite and tolerance.”
Your health history can affect what type of policy you are eligible for and how much premium you’ll pay each month. If you have asthma, for instance, the underwriter may review when you were diagnosed, how frequently you have symptoms, if you’ve been hospitalized, and what medications you take. If you manage your asthma effectively, you may still qualify for a standard or preferred rate. However, even if you experience asthma attacks or need medical assistance, you can still be eligible for coverage, it just may be at a higher premium.
Remember that underwriting guidelines vary among insurance companies, so working with a financial professional can help find the best policy for you.
When applying for life insurance coverage, you will likely be asked about your lifestyle habits and hobbies, safety precautions, and how often you participate in these activities. “The key is for the company to have a nuanced understanding of a person’s lifestyle habits, hobbies and activity,” shares Regione. “For example, understanding how often they engage in risky behavior and the type of activities they engage in will provide guidance to determine the best rate class that can be provided.”
Even if you enjoy skydiving or rock climbing, it doesn’t necessarily put you out of the running for getting a policy. Since participating in high-risk jobs or hobbies can affect your life expectancy, the insurance company must consider these. Many companies will still approve you for coverage, but these factors may increase your monthly premium.
Separating fact from fiction regarding life insurance underwriting can help you become better informed about the process and what you can do to make the steps go smoothly. When you understand the timing and what to expect, you can help lower your stress about applying for coverage and help put financial protection in place today.