Term Life Insurance: Underwriting – What?

UPDATED: Feb 25, 2020

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Don’t you just love life insurance jargon? Agents and brokers use it constantly when talking to life insurance company reps and coworkers. Unfortunately for some, it can be difficult to turn off the ‘jargon switch’ when speaking with customers. And this isn’t unique to the life insurance world. You may even use jargon in your field of work without even realizing it.

Confusing Insurance Words

Two terms that seem to cause confusion for term life insurance applicants are ‘underwriter’ and ‘underwriting.’ Who are these strange people and what are they doing to your term life insurance application?

An underwriter is a person employed by the life insurance company who is responsible for compiling all of the needed information about the applicant. Once the information is collected, the underwriter then analyzes it to determine mortality risk and ultimately issues a decision on acceptance and a rating class. The term underwriting is used to describe the process of collecting information and analyzing the mortality risk of the applicant. So, if your agent tells you ‘your application is still in underwriting,’ this just means the underwriter is still in the process of collecting and analyzing information about you.

According to Wikipedia, the term underwriter has quite a history. Back in the 1600’s, a coffee house called Lloyd’s Coffee House in London was a popular hangout for investors, sailors, ship owners and merchants. Lloyd’s (also known as Lloyd’s of London) provided valuable information about shipping news. The investors used the information to assess the risk of the ship voyages, and if agreeable they would write their name on a document underneath the risk assessed for a certain ship voyage in exchange for a premium. So, they would literally ‘write under’ the risk. Over time, this process became known as underwriting.

Other Wacky Life Insurance Lingo

Curious about other life insurance jargon you may have come across lately? The following is a list of more industry lingo you may hear when talking with your agent or life insurance company.

  • APS – Attending Physician’s Statement (aka Medical Records)
  • App – Your Insurance Application
  • Paramed – Paramedical Examination
  • MVR – Motor Vehicle Report (aka DMV Records)
  • IR – Inspection Report (aka Telephone Interview)
  • PFS – Personal Financial Statement
  • HOS – Home Office Specimen (aka Urine Sample)
  • Delivery Requirements – These are forms, signatures, payment, etc. needed to put your new policy in force.

Now you’re all set to write a jargon-laced email that will surely impress your agent!

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