An Introduction to Life Insurance Underwriting

October 18, 2022 | Jessica Richter

When applying for a life insurance policy, it is helpful to know the different types of life insurance underwriting you may experience as you go through the approval process. Let’s look at what it means to assess your risk as an applicant, and how the insurance company will determine your level of risk to be insured.

For an insurance company to take on the risk of insuring you, they first need to know how much of a risk you may be. This is determined by collecting different personal health history data from you, thereby allowing the company to identify specific things that may increase the risk of your insurability. It is not uncommon to be too much of a risk to the company. Alternatively, certain things can deem you not a risk at all – which can benefit you greatly.

Read: How Can Preexisting Conditions Affect Life Insurance Approval?

Mortality risk is the most common type of risk life insurance companies will assess. This means the company will evaluate the “increased likelihood for someone dying, versus others of their gender and age group.” – Andy McCurdy, senior life underwriting consultant at Securian Financial.

How Does Life Insurance Underwriting Work?

Dependent upon the underwriting tract you are assigned, you can be subject to different life insurance underwriting requirements. Traditional underwriting will require a more in-depth look at your medical, financial, and driving history.

The alternative is an accelerated underwriting process that allows skipping some more detailed information about your health and financial history. The underwriting assigned will depend on the death benefit amount and the policy type you have applied for.

Underwriting Examples 

• Paramedical Exams – height, weight, blood pressure, and pulse
• Home Office Specimen (HOS) – obtained urine sample 
• Blood Profile – blood draw, usually by venipuncture
• Electrocardiogram (EKG) – results from a resting electrocardiogram 
• Personal History Interview (PHI) – a general interview conducted by underwriting to gather information to help assess your insurability 
• Motor Vehicle Report (MVR) – a look into your driving record

You may also need to undergo income (financial) underwriting on a life insurance policy with a significant death benefit. Insurance companies do not want to approve an application for a policy that could easily lapse and may not be affordable to the policyholder.

These are some common requirements an applicant may experience through the underwriting process. These conditions will vary for each person and can produce different results for everyone. Underwriters want to be sure the policy is affordable and makes sense for your needs and lifestyle. Remember that companies will have different underwriting terms based on the product, and the policy amounts the applicant is applying for. 

The stages of life insurance approval can bring questions and confusion. Call Twin City Underwriters at 651-488-0172 to review your options today and to discuss what the approval process may look like for you!