What Is Life Insurance Underwriting?

Underwriting is the process life insurers use to evaluate your risk. In short, it answers two questions: will the company offer you coverage, and if so, at what price. It happens behind the scenes after you apply, and understanding it explains why two people of the same age can get very different quotes.

What happens during underwriting

1. Application. You provide personal details, health history, medications, tobacco use, occupation, hobbies and financial information.
2. Verification. The insurer checks your answers against prescription databases, medical-information databases and your driving record.
3. Medical evidence. Depending on age, coverage amount and the insurer, this may include a paramedical exam with measurements and blood and urine samples, or it may be waived under no-exam programs. For some applicants, the insurer requests records from your doctors.
4. Risk assessment. An underwriter, sometimes assisted by software, reviews everything and assigns a rate class.
5. Decision. You receive an offer, which you can accept, negotiate or decline.

Rate classes

Insurers group applicants into classes. Names differ, but a typical ladder looks like this, from lowest price to highest:

• Preferred Plus (or Super Preferred): excellent health, healthy weight and blood pressure, no tobacco, clean family history.
• Preferred: very good health with minor deviations.
• Standard Plus and Standard: average health or some manageable conditions.
• Substandard or table-rated: health conditions that raise risk, often priced at a percentage above standard.
• Tobacco classes: separate classes for smokers and nicotine users. See life insurance for smokers.

What underwriters look at

• Height and weight (body mass index), blood pressure and cholesterol.
• Medical history, including conditions, surgeries and treatments.
• Family history of serious conditions such as heart disease or cancer at younger ages.
• Lifestyle: tobacco, alcohol and substance use, and risky hobbies such as private flying, scuba diving or racing.
• Occupation and travel to certain regions.
• Driving record and any history of serious violations.
• Financial justification: whether the coverage amount makes sense for your income and obligations.

How long it takes

Timelines vary. Accelerated and simplified programs can produce a decision in minutes or days. Fully underwritten policies with exams and doctor records often take a few weeks, and sometimes longer if the insurer is waiting on medical records.

Preparing for a medical exam

• Follow the examiner's instructions, which commonly include fasting for a period beforehand.
• Many people are advised to avoid heavy exercise, alcohol and excessive caffeine before the exam, since they can affect readings. Follow your insurer's guidance.
• Have a list of your medications, doctors and health history ready.
• Answer honestly. Inconsistencies between your answers and medical records can slow things down or cause problems later.

Possible outcomes

• Approved as applied: you get the class and price you expected.
• Approved with a higher price: sometimes called a rating. You can ask what drove it and whether it could improve later.
• Postponed: the insurer asks you to try again after a condition stabilizes or treatment ends.
• Declined: the insurer will not offer coverage.

If you are rated up or declined

1. Ask for the specific reason.
2. Check the accuracy of any records the insurer used. Errors happen, and you have the right to request and dispute information in certain consumer reports.
3. Apply with other insurers. Their guidelines differ, and one company's decline is not another's.
4. Consider an independent agent who can match your profile to insurers with a better appetite for it.
5. If standard coverage is unavailable, look into simplified-issue, group coverage through work, or guaranteed-issue products. See no-exam coverage explained.

Once you have offers in hand, our guide to reading a life insurance quote helps you compare them.