Life Insurance Underwriting: 6 FAQs about | Securian Financial

Now that you’ve made your decision, there are a few more things to consider. Do you want term or permanent life insurance? How much do you want to pay for a policy? what do you want the death benefit to be? After speaking with your insurance agent, you’ll be ready to make these decisions and move on.

However, before you check the “I’m insured” box, there’s another step in the process. And that’s underwriting, a process that many people who apply for insurance don’t understand. that is, until now.

Reading: How long does life insurance underwriting take

Keep reading to learn the basics of subscription and how it may affect you. your new knowledge is sure to bring you to a higher comfort level as you go through the process.

q: what is subscription?

a: Underwriting is a process that all applicants for insurance coverage must go through. helps determine if an applicant is insurable, and for what amount and at what cost to the applicant. it is designed to provide the fairest price for a person’s risk profile.1

Your age, gender, current health status (both physical and mental), medical history, occupation, hobbies, lifestyle habits, and more are factors that determine a fair premium for your risk profile.

mortality risk is often associated with life insurance. An underwriter will look at “the higher probability of someone dying compared to others of the same gender and age group,” says Andy McCurdy, senior life insurance underwriting consultant at Securian Financial.

For example, a 35-year-old woman who smokes and has a poor driving record is likely to pay more for her life insurance than a woman in the same age group who doesn’t smoke and obeys all traffic laws and a A 45-year-old man who works as a computer analyst has a lower mortality risk than a man in the same age group who works as a deep-sea fisherman.

q: how does the subscription work?

a: There are two tranches available: full (or traditional) underwriting policies and accelerated underwriting policies. both treaties require the applicant to provide personal information including her financial and medical history, such as annual earnings. and both treaties will lead to the collection of your prescription history and motor vehicle report.

The traditional treatment will include a medical exam, in which your height, weight, pulse and blood pressure will be checked. samples of your blood and urine are collected.

See also: Our History

The expedited tract is more streamlined, which means it allows you to skip medical exams and blood and urine tests. for example, accelerated underwriting incorporates tools and techniques (ie, algorithms) that predict relative mortality across a variety of behaviors. however, to qualify, the applicant must be in good health and not over the age of 60.

The traditional subscription takes between 45 and 60 days to complete and usually offers you the best price, if your general health is good. however, given the state of the world, many people opt for the expedited version to avoid clinic and home visits.

p: what are subscribers looking for?

a: Underwriters want to be sure that the face amount makes sense and is an affordable premium. In addition, insurers will ensure that the insurance product matches the needs of the client.

Family history and medical risks are also taken into account. are you a tobacco user? how much alcohol do you consume? Do you use illicit drugs?

Insurers trust that the client is giving them accurate information when they complete the 60+ question application.2 However, to be on the safe side, backup measures are put in place, just in case. In addition to providing supporting evidence for important questions, such as whether a client has recently used tobacco, laboratory tests also provide valuable information about a client’s current health status and can highlight potential problems with key organs such as the liver, kidneys and the heart.

“We started with that trust,” says McCurdy. “We trust that the client will provide us with good information to make an accurate risk assessment decision. however, if there is conflicting or ambiguous information, the underwriter may ask further questions or order additional requirements to obtain the necessary clarifying details.”

It is important that you are honest and as accurate as possible when answering all questions. dishonest applicants risk having their policy voided in the future.

Insurers may collect information about you through health records (your request will ask you to sign a HIPAA-compliant consent form), pharmaceutical databases, motor vehicle reports, public records, and financial statements. (especially if you want a life insurance policy for more than $5 million).

all this information collection allows you to obtain an exact price of your coverage.

Q: How does medical history influence the underwriting decision?

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a: In summary, the medical history plays an important role. but it is not necessary to have a perfect medical record. in fact, most people don’t.

What if your medical history is less than ideal? still, apply for life insurance. do you have high blood pressure? That doesn’t mean you should wait to get insurance. high blood pressure can lead to other medical problems, such as stroke or heart disease. And your premiums will only go up if that happens.

Yes, over time, you may be able to lower your blood pressure through diet, exercise, or medication. but, until that happens, precious time passes. you don’t want something to happen to you and not be able to provide a financial safety net for your loved ones. Plus, insurance premiums go up 3 to 5 percent every year you get older.1

The rating you receive doesn’t stay with you forever, McCurdy says. your risk factor may improve if your health improves. “There are opportunities in most situations for a client to come back and get reassessed,” she says.

something that is currently unclear: the long-term effects of covid-19. “As we learn more about this new disease, our underwriting guidelines will change,” says Michele Lee, senior life insurance underwriting consultant at Securian Financial.

q: what is the difference between the individual subscription and the group subscription?

a: Underwriting the coverage you sign up for at work is typically a quicker and less rigorous process than if you’re purchasing coverage individually from another source.

Group insurance is usually obtained through an employer or an entity, such as a labor organization. with group insurance, is approved or not approved. with individual insurance you can be approved in several rate classes: select preferential, preferential, standard or substandard.

q: what can a person do to speed up the subscription process?

a: Whether you’re preparing for the traditional or accelerated enrollment process, collect your health information ahead of time so you can provide an accurate health summary.

Remember that the underwriting process is one step in having a life insurance policy that works for everyone.

See also: How Do Life Insurance Agents Get Paid? |