Life Insurance Underwriting Process

Shawn Plummer

CEO, The Annuity Expert

Let’s not beat around the bush—you’re here to understand the intriguing yet perplexing world of insurance underwriting. Whether you’re a small business owner looking to protect your empire, a concerned parent seeking health insurance, or simply someone who’s curious about what the insurance jargon actually means, you’ve come to the right place. In this comprehensive guide, you’ll learn all you need to know about insurance underwriting. So, let’s get started!

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Understanding Medical Underwriting: Simplifying the Process

Underwriting is the process insurance companies evaluate the risk of insuring a person or entity and determine the terms and pricing of that coverage. It involves assessing various factors to decide if an application should be accepted, modified or declined. In medical underwriting, the process is used by life insurance companies to assess an individual’s health and mortality risk before approving their life insurance application. It involves thoroughly evaluating the applicant’s medical history, lifestyle, and other relevant factors to determine their insurability and premium rates. Let’s explore the critical elements of medical underwriting to help you understand the process better.

The Role of Medical Underwriters: Decoding Their Expertise

Underwriters are the professionals who assess the risk associated with insuring an individual’s life. They use their expertise and industry knowledge to analyze age, gender, occupation, medical history, and lifestyle habits to determine the risk level. Their role is crucial in the approval process, as they ensure that the insurance company is taking on an acceptable level of risk.

The Importance of Medical History: Disclosing Relevant Information

Your medical history is a critical factor in the medical underwriting process. It includes information about any preexisting medical conditions, surgeries, medications, or treatments you have had. Therefore, providing accurate and complete information to the insurance company during the underwriting process is essential. Failure to disclose relevant medical history can result in denial of coverage or claim denial later on. However, it’s important to note that your medical history is confidential and protected by privacy laws.

Lifestyle Factors: Impact on Underwriting

Your lifestyle habits, such as smoking, drinking, or engaging in hazardous activities, can impact the underwriting process. Insurance companies assess these factors to determine the risk of insuring your life. For example, smoking or having a risky occupation may result in higher premiums due to the increased mortality risk.

What Is A Life Insurance Underwriter

Medical Underwriting Requirements: What to Expect

To assess your insurability, underwriters may require specific documents and information to complete the medical underwriting process. So, look at some standard requirements you may encounter during the underwriting process.

Medical Exams: Evaluating Your Health

Insurance companies may require you to undergo a medical examination during the underwriting process. This may involve essential blood pressure, cholesterol, BMI measurements, and more comprehensive tests like blood and urine analysis. These exams help the underwriters to assess your overall health and detect any underlying health conditions that may impact your insurability.

Medical Records: Providing a Complete Picture

Underwriters may request your medical records from your healthcare providers to get a complete picture of your health. This may include medical history, past surgeries, treatments, and medications. Therefore, ensuring that your medical records are up-to-date and accurate is essential to avoid delays or discrepancies during the underwriting process.

Lifestyle Questionnaires: Detailing Your Habits

Insurance companies may require you to complete lifestyle questionnaires to provide information about your habits, such as smoking, alcohol consumption, and risky activities. These questionnaires help underwriters assess the aptness of your lifestyle choices about your insurability. Providing accurate and truthful information ensures a smooth and transparent underwriting process.

Medical Underwriting For Life Insurance

The Health Insurance Underwriting Process: Step-by-Step Guide

The health insurance underwriting process typically involves several steps to evaluate your health and mortality risk. Let’s walk through the process to help you better understand what to expect.

Step 1: Application Submission

The first step in the underwriting process is submitting your life insurance application. This typically includes providing the insurance company with personal information, medical history, lifestyle habits, and other relevant details. It’s crucial to be thorough and accurate in filling out the application to ensure that the underwriters have the complete and correct information to assess your insurability.

Step 2: Initial Assessment

Once your application is submitted, the insurance company’s underwriters will review it to assess your initial insurability. They may evaluate factors such as age, gender, medical history, lifestyle habits, and the desired coverage amount to determine the risk of insuring your life.

Step 3: Additional Information and Documentation

Based on the initial assessment, underwriters may request additional information or documentation to complete the underwriting process. This may include medical exams, medical records, lifestyle questionnaires, or other relevant documents. It’s essential to promptly and accurately provide the requested information to avoid delays in the underwriting process.

Step 4: Underwriter Evaluation

Once all the required information is gathered, the underwriters will evaluate your overall insurability based on the collected data. They will assess your health condition, medical history, lifestyle habits, and other relevant information to determine your mortality risk and the appropriate premium rates.

Step 5: Decision and Offer

After the evaluation, the underwriters will decide on your life insurance application. Then, they will offer an offer outlining the coverage amount, premium rates, and other relevant terms and conditions if approved. Therefore, it’s essential to carefully review the offer and seek clarification on any unclear terms before accepting or declining it.

Life Insurance Approval Process: Understanding the Outcomes

The life insurance approval process can have different outcomes based on the underwriters’ evaluation. So let’s explore the possible outcomes and what they mean for your coverage.

Approved: Congratulations!

If your application is approved, the insurance company has found you eligible for coverage based on their underwriting evaluation. You will receive an offer outlining the coverage amount, premium rates, and other terms and conditions. Therefore, reviewing the offer thoroughly and ensuring you understand all the details before accepting it is essential.

Rated: Higher Premiums

In some cases, the underwriters may approve your application but rate it, which means you will be charged a higher premium than the standard rate due to the higher mortality risk associated with your health condition, medical history, or lifestyle habits. Therefore, it’s essential to carefully review the rated offer and consider if the higher premiums are affordable and within your budget.

Declined: Denied Coverage

If your application is declined, the insurance company has determined that the risk associated with insuring your life is unacceptable based on their underwriting evaluation. This could be due to various reasons, such as preexisting medical conditions, high mortality risk, or other factors. If your application is declined, it’s crucial to understand the reasons and explore other options for coverage, such as seeking coverage from a different insurance company or considering alternative insurance products.

Simplifying Medical Underwriting Requirements: What You Need to Know

The medical underwriting process may require specific requirements that can seem overwhelming. So let’s break down the standard requirements to help you understand what you need to know.

  • Medical Exams: Insurance companies may require you to undergo a medical exam as part of the underwriting process. The exam may include height, weight, blood pressure, and other relevant health indicators. It may also involve blood, urine, and other diagnostic tests to assess your overall health.
  • Medical Records: Insurance companies may request access to your medical records from your healthcare providers to review your medical history. This may include information about past illnesses, surgeries, medications, and other relevant health-related details.
  • Lifestyle Questionnaires: Insurance companies may ask you to complete lifestyle questionnaires about your habits, such as smoking, alcohol consumption, drug usage, and other lifestyle factors that may impact your health and mortality risk.
  • Family Medical History: Insurance companies may request information about your family’s medical history, including any genetic or hereditary conditions that may increase your mortality risk.

It’s essential to provide accurate and complete information during the underwriting process to ensure the evaluation is based on accurate data. Any discrepancies or omissions in the information provided may result in delays or inaccuracies in the underwriting decision.

Understanding the Role of an Underwriter in Life Insurance

The role of an underwriter is critical in the life insurance underwriting process. Underwriters are trained professionals who assess the risk of insuring an individual’s life and determine the appropriate premium rates and terms. Let’s explore the critical responsibilities of an underwriter:

  • Risk Assessment: Underwriters evaluate the risk associated with insuring an individual’s life based on various factors such as age, gender, health condition, medical history, lifestyle habits, and other relevant information. They use actuarial tables and statistical data to assess the mortality risk and determine the appropriate premium rates.
  • Decision Making: Underwriters decide on the approval, rating, or declination of life insurance applications based on risk evaluation. They consider various factors and use their expertise and judgment to make decisions that align with the insurance company’s underwriting guidelines and policies.
  • Communication: Underwriters may communicate with insurance agents, brokers, or other stakeholders to gather additional information, clarify details, or explain the underwriting decision. They may also communicate directly with applicants to request additional information, provide offers, or explain why they declined applications.
  • Adherence to Guidelines and Regulations: Underwriters follow industry regulations, company underwriting guidelines, and ethical standards to ensure that the underwriting process is conducted in a fair, unbiased, and transparent. They adhere to privacy and confidentiality requirements and handle sensitive information professionally and honestly.
An Incomplete Life Insurance Application Submitted To An Insurer

Top Tips for a Smooth Medical Underwriting Process

The medical underwriting process can be complex, but there are several tips you can follow to ensure a smooth and successful experience:

  • Provide Accurate Information: It’s crucial to provide accurate and truthful information during the application and underwriting process. Any discrepancies or omissions may result in delays, inaccuracies, or declined applications. Be transparent about your medical history, lifestyle habits, and other relevant details to ensure a thorough and accurate evaluation.
  • Be Prepared for Medical Exams: If a medical exam is required, be prepared by scheduling the exam promptly and following any pre-exam instructions provided by the insurance company. This may include fasting for blood tests, avoiding certain medications, or other preparations. Cooperate fully with the healthcare professionals conducting the exam and provide complete and accurate information during the exam.
  • Review Your Medical Records: Before submitting your application, review your medical records to ensure that all information is accurate and up-to-date. If you identify any errors or discrepancies, notify your healthcare provider to correct them before the underwriting process begins. This can help avoid any potential issues or delays during the underwriting process.
  • Stay Honest About Your Lifestyle Habits: It’s essential to be honest about your lifestyle habits, such as smoking, alcohol consumption, or drug usage, as these factors can impact your underwriting decision. In addition, providing truthful information will ensure that you receive accurate premium rates and terms based on your risk profile.
  • Communicate with Your Insurance Agent: Your agent can be a valuable resource throughout the underwriting process. Keep open lines of communication with your agent and provide any additional information or documentation as requested. Your agent can also help address any questions or concerns you may have during the process.

Have you ever consulted a member of the medical profession regarding or have you been diagnosed or treated for:

  • High blood pressure, high cholesterol, abnormal electrocardiogram, chest pain, irregular heart rhythm, palpitations, heart murmur, heart attack, angina, phlebitis, peripheral vascular disease, or any other disease or disorder of the heart or blood vessels?
  • Hepatitis, ulcer, internal bleeding, colitis, acid reflux, GERD, or any other disease or disorder of the stomach, gall bladder, esophagus, liver, pancreas, spleen, intestines, colon, or rectum?
  • Does your blood or immune system disorder include anemia, blood clots, bleeding, immune deficiency, leukemia, or lymphoma (excluding HIV)?
  • Cancer, tumor, melanoma, or any other malignant disorder?
  • Diabetes, high blood sugar, or any other disease or disorder of the pituitary, thyroid, or endocrine glands?
  • Albumin, protein, blood, or sugar in the urine or any other disease or disorder of the kidney or bladder?
  • Cyst, polyp, lump, further growth, or any disease or disorder of the skin or lymph nodes?
  • Any disease or disorder of the uterus, cervix, ovaries, or breasts?
  • Any disease or disorder of the prostate or reproductive system?
  • Any sexually transmitted disorders or diseases?
  • Pregnancy, complications of pregnancy, or infertility? If now pregnant, what is the expected date of delivery?
  • Asthma, shortness of breath, chronic cough or hoarseness, bronchitis, emphysema, COPD (chronic obstructive pulmonary disease), sarcoidosis, pneumonia, TB (tuberculosis), sleep apnea, or other disorders of the respiratory system?
  • A disorder of the brain, spinal cord, or nervous system, including chronic headaches, convulsions or loss of consciousness, seizures, tremors, paralysis, fainting, stroke, MS (multiple sclerosis), or TIA (transient ischemic attack)?
  • Depression, anxiety, psychosis, suicidal thoughts or attempts of suicide, anorexia or bulimia, obsessive-compulsive disorder, bipolar disorder, or other mental, nervous, or emotional disorder?
  • Arthritis or disorder of the bones, skin, or muscles?
  • Any disease or disorder of the eyes, ears, nose, or throat?
  • Been treated by a member of the medical profession or at a medical facility? Had an electrocardiogram, x-ray, blood test, or other diagnostic tests, excluding an HIV test?
  • Had surgery or biopsy, or been an inpatient or outpatient in a hospital, clinic, or other medical or mental health facilities?
  • Has it been advised by a medical professional member to have surgery, medical treatment, biopsy, or diagnostic testing, excluding HIV testing, that has not yet been completed?
  • Have you been referred to any other medical professional or facility member?
  • Been unable to work, attend school, perform everyday activities like age and gender, or be confined at home?
  • Have you ever used amphetamines, barbiturates, cocaine, heroin, crack, marijuana, LSD, PCP, or other illegal, restricted, or controlled substances, except as a licensed physician prescribes?
  • Have you ever been addicted to prescription medication or been advised by a physician to discontinue using habit-forming drugs?
  • Have you ever consumed alcoholic beverages? If Yes, give the type and number of drinks per day or week. Have you been advised by a physician or other licensed medical practitioner to limit or cease the use of alcoholic beverages?
  • Do you smoke or consume tobacco?
  • Been counseled, sought help or treatment, or been advised by a physician or other licensed medical practitioner to undergo counseling or treatment for alcohol problems?
  • Attended or joined any organization due to alcohol or related problems?
  • Are you taking or have you been advised to take any prescribed medication?
  • Have you tested positive for exposure to HIV infection or been diagnosed with ARC (AIDS-Related Complex) or AIDS (Auto Immune Deficiency Syndrome) caused by HIV infection or other sickness or condition derived from such infection?
  • In the past five years, have you been diagnosed, treated, tested positive for, or been given medical advice by a member of the medical profession for any disease or disorder not previously stated on this application?

Having a Preexisting Medical Condition

It may be difficult to get life insurance due to a preexisting medical condition or impairment under some circumstances, but don’t fret; we can help you find a solution. First, contact us for a life insurance quote that requires no exam. In the meantime, I’ve listed examples of conditions or impairments that might give you difficulty getting coverage.

Disclaimer: Every insurance company has different parameters, so please use this as a reference.

  • Activities of daily living (ADL’s) limitations requiring assistance
  • Alcoholism with less than two years of sobriety since alcohol treatment or diagnosis
  • Alzheimer’s disease or dementia
  • Amyotrophic Lateral Sclerosis (ALS)/Lou Gehrig’s disease
  • Autism, under age 8
  • Bankruptcy, Chapter 7 that has not been discharged
  • Body Mass Index (BMI) over 48.
  • Cancer, the majority of stage 4 only
  • Cardiac defibrillator
  • Chronic Myeloid Leukemia
  • Chronic Obstructive Pulmonary Disease (COPD) requires oxygen
  • Chronic pain treated with Methadone
  • Congestive heart failure (CHF) is not resolved
  • Coronary artery disease diagnosed before age 35
  • Criminal history, currently on probation or parole
  • Cystic fibrosis
  • Diabetes Mellitus, applicants, aged 0 to 17 only
  • Diagnostic testing is advised but not completed yet
  • Down syndrome, age 0 to 16 and over age 40
  • Driving violations that involve multiple DUIs, with the last one occurring within the last three years
  • Drug treatment or illegal drug use (other than marijuana) in the last three years
  • Esophageal varices
  • Heart valve stenosis, severe without heart valve replacement
  • Kidney failure requiring dialysis
  • Muscular Dystrophy
  • Pregnant currently with complications such as gestational diabetes, toxemia, eclampsia, or pre-eclampsia
  • Pulmonary fibrosis
  • Pulmonary hypertension
  • Quadriplegia
  • Sclerosing cholangitis
  • Sickle cell anemia, age of applicant under 30
  • Suicide attempts within the last year
  • Transplant recipient of a liver, heart, or lung

Apply For Life Insurance While You’re Young.

Life insurance companies use your life expectancy to set the price. So anything that could shorten your life expectancy can make the insurance more expensive.

Buy a life insurance policy when you are young and healthy. If you wait, your rates will increase because of your age. And if new health problems arise, they can go up even more.

You can still get life insurance if you have a medical condition, like diabetes or high blood pressure. Life insurance companies will vary in how they view your preexisting conditions. Some types of life insurance do not require a medical exam.

What Percentage Of People Are Denied Life Insurance?

According to industry estimates, as many as 20% of people who apply for life insurance are denied coverage. There are various reasons why an insurance company may deny coverage, but some of the most common include a history of smoking, high blood pressure, and obesity.

If you have been denied life insurance, it is essential to understand why. This way, you can improve your chances of being approved.

How To Skip The Life Insurance Underwriting Process

You can do a few things to help ensure that you don’t have to go through the underwriting process when buying life insurance.

First, if you’re in good health, you may be able to qualify for a no-medical exam policy. These policies generally have higher premiums than traditional policies, but they can be a good option for people who want to avoid the underwriting process.

You can also try to get a policy through a life insurance broker (like The Annuity Expert). Brokers typically have access to multiple insurers and can help you find a policy that doesn’t require a medical exam.

Best Life Insurance Policy
No Medical Exam Life Insurance

A Warning About Running Life Insurance Quotes Yourself.

If you think you might get declined for life insurance coverage due to a preexisting condition, do not by any means apply for coverage and hope for the best. If you are officially declined from coverage, most insurance companies will not accept you for at least two years for those reasons alone.

So talk to an expert first. Let them consult with you on your options, then go from there. We can run additional life insurance quotes that don’t require a medical exam.

Some annuities have enhanced death benefits if you can’t get coverage.

So let’s get a quote for life insurance now!

Helpful Tip: For an affordable solution to set up your comprehensive estate plan, including a living trust and last will and testament, we strongly suggest:

Life Insurance Underwriting Process Flow

Next Steps

In conclusion, understanding the medical underwriting process for life insurance is crucial for anyone seeking life insurance coverage. It involves thoroughly evaluating an individual’s health and other relevant factors to determine the risk associated with insuring their life. By adopting a people-first approach and providing accurate information, cooperating with medical exams, and communicating openly with your insurance agent, you can ensure a smooth and successful underwriting process.

Life Insurance Underwriting Process

Need Help Getting Life Insurance Coverage?

If you have a preexisting medical condition and want to buy life insurance, you will need help from an expert. This person can help ensure you get coverage so you don’t get declined.

Warning: Applying for life insurance without a medical exam can be risky. If you get declined coverage, it could be at least two years before you can get any life insurance.

Impaired Risk Life Insurance
Have You Been Declined Life Insurance Coverage Before?

Frequently Asked Questions

What is a paramedical exam?

A paramedical exam is a medical examination a trained medical professional conducts to assess an individual’s health and fitness for a specific purpose. This could be for employment, insurance purposes, or eligibility for certain types of medical treatment. The scope of a paramedical exam can vary depending on the reason it is being conducted. Still, generally speaking, it will involve taking some basic vital signs (such as blood pressure and heart rate) and measuring height and weight. More comprehensive tests, such as blood tests or urine analyses, may also be carried out in some cases.

What happens if an incomplete life insurance application is submitted to an insurer?

An incomplete life insurance application to an insurer could result in the denial of benefits to the insured or may only provide partial coverage. Therefore, applicants must be as forthcoming as possible when completing a life insurance application to ensure they receive the policy’s full benefit.

What are the three types of underwriting?

Three types of underwriting exist loans, insurance, and securities.

What are the types of underwriting?

Three kinds of underwriting exist, loans, securities, and insurance. Underwriting is a crucial process in the financial world because it helps investors make profitable investment decisions.

What is called underwriting?

Underwriting is one of the most critical functions in the financial world. An individual or an institution undertakes the risk associated with a venture, an investment, or a loan instead of a premium. Underwriters are found in banking, insurance, and stock markets.

What is an example of an underwriting process?

For instance, an insurance company uses underwriting to judge applicants for coverage and decide whether to accept or deny their applications. Similarly, a mortgage lender relies on underwriting to evaluate a loan application and determine whether to approve or reject a home loan.

What are the methods of underwriting in insurance?

The underwriting method refers to the assessment of risk for pricing group insurance. When underwriting a group benefits plan, there are three primary considerations: liability (risk) – the responsibility for paying eligible claims.

*Disclosure: Some of the links in this guide may be affiliate links. I may receive a commission at no cost to you if you purchase a policy. It helps us keep the lights on!

Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed insurance agent and annuity broker with over a decade of in-depth experience. Since beginning his journey in 2009, he has not only been pivotal in selling and educating about annuities and insurance products but has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates. 

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