Term Life Insurance Underwriting Process

UPDATED: Mar 2, 2020

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Underwriting doesn’t happen overnight. It takes time. Patience, grasshopper.

Application? Check. Paramed exam? Check. Now what?

Welcome to the wacky world of term life insurance underwriting. Now, get ready to sit back and wait. On average, this process takes about four weeks. But don’t worry, a lot will happen during this time as the underwriter and your Case Manager work together on your application.

It’s time to meet your Case Manager.

We’ll assign your application to a Case Manager during underwriting. Your Case Manager’s role is to work with you and the insurance company to get your application approved as quickly as possible.

Your Case Manager will keep you updated on the progress of your application. She may ask you for help along the way if the underwriter requests information. You’ll work closely together, and the more responsive you are, the quicker she can get a decision from the insurance company.

What is underwriting, anyway?

Glad you asked. It’s similar to the process you go through when you apply for a student loan, auto loan or mortgage. Just like loans, you have to be approved for life insurance.

You see, it’s all about risk. The company wants to make sure that if they issue you a policy, you’re going to be around for a good, long time. When underwriting your application, the company looks at many things, including:

  • Life insurance application
  • Health questionnaire
  • Paramedical exam
  • Motor Vehicle Report (MVR)
  • Medical Information Bureau Report (MIB)
  • Prescription medication history (Rx Report)

If you are older or applying for a very large amount of life insurance, the underwriter may collect additional information such as:

  • Resting Electrocardiogram (ECG)
  • Financial questionnaire
  • Credit report
  • Inspection report
  • Physician’s exam

You can see why underwriting can take a while. That’s a lot of information to gather. But remember, just like you, your application is unique. Company guidelines will determine how much of this information is needed by the underwriter.

The Underwriting Decision

The life insurance company has gathered all of this information about you, and you’re left wondering if you measure up to their standards. It can be frustrating, we know. But know this: 95% of our applicants qualify for coverage.

The underwriter will take your information and compare it with the company’s underwriting guidelines. This comparison allows the underwriter to place you in a group of people with similar risk characteristics. Not every person in the group will have the exact same mortality, but overall the group will have a fairly predictable life expectancy. This group is known as a rating class.

Your rating class provides the company the basis for determining how much you will pay for your policy. The lowest rates go to the preferred rating classes. The higher risk classes, such as standard and substandard, cost more.

Your Case Manager will let you know when your application is approved or declined. She’ll also let you know the cost and, with your approval, will ask the insurance company to issue your policy.

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