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How Does Life Insurance Underwriting Work?

Every life insurance applicant is different. Life insurers must calculate each applicant’s risk to offer fair rates while properly accounting for the applicant’s risk. Life insurance companies have specialists called underwriters to examine all these factors and use mathematical formulas to arrive at life insurance rates that fit each situation. This article explains how life insurance underwriting works and offers some tips for securing better life insurance rates to help you get the coverage you need.

What is life insurance underwriting?

Life insurance underwriting is the process where insurers evaluate an applicant’s information, such as age, health, and lifestyle, to determine the applicant’s risk and make policy approval and terms decisions.

Underwriting helps insurers calculate the premiums they must charge to account for a policyholder’s risk, coverage amount, and policy type. During underwriting, the underwriter will examine the application information, health records, statistical data, and medical exam results, if applicable. Insurers may differ in their formulas and procedures for calculating risk. As a result, each insurer may offer different rates for the same policy type and coverage amount.

Types of life insurance underwriting

To build a comprehensive risk profile, life insurance underwriters examine your health and financial picture. This involves two forms of underwriting:1

Medical underwriting

Medical underwriting entails evaluating the applicant’s health and lifestyle factors that can impact their risk. Medical exams are a big part of underwriting. The examiner gets a detailed health history and other health information. They also take blood and urine samples to analyze various health risks and lifestyle factors. Some policies don’t require a medical exam but may still ask basic health questions to help the insurer calculate risk.

Financial underwriting

Financial underwriting involves analyzing the applicant’s financial circumstances and needs to ensure the policy they apply for fits their situation. This helps applicants avoid overpaying for coverage they don’t need and maintain life insurance as a safety net. The insurer may analyze your assets, debts, and income during financial underwriting. Some insurance companies may also evaluate credit scores.

What factors do life insurance underwriters consider?

Life insurance underwriters analyze a range of factors to build a comprehensive risk profile and make decisions regarding approval, premiums, and terms:2

  • Age: Premiums increase with age. Younger policyholders qualify for more cost-effective premiums given the same coverage.

  • Health: Chronic health conditions can lead to higher risk and, therefore, higher premiums. However, managing your condition can cause insurers to be more lenient.

  • Family medical history: A family history of certain health conditions indicates a higher risk that you develop the condition, resulting in higher premiums.

  • Gender: On average, men pay more than women due to a lower average life expectancy.

  • Occupation: Insurers consider jobs like law enforcement, aviation, and construction high-risk and may charge higher premiums.

  • Lifestyle: Hobbies like scuba diving, rock climbing, and motorsports are considered high-risk and can lead to higher premiums. Smoking and heavy alcohol consumption are also lifestyle factors that increase risk and, therefore, premiums.

  • Driving record: Insurers may check your driving record to calculate risk and premiums.3 A clean driving record indicates a lower risk of a fatal accident. The insurer may ask about your driving on the application and access your motor vehicle report, or MVR, from your state’s Department of Motor Vehicles.

  • Policy type: Term life insurance is more cost-effective than permanent life insurance for the same amount of coverage. Additionally, permanent life insurance premiums can vary by permanent policy type.

  • Policy amount: More coverage costs more in premiums.
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The life insurance underwriting process

The life insurance underwriting process involves several steps:1


Underwriting starts at the application. You’ll provide basic information about yourself, such as your age, gender, job, lifestyle factors, and personal and family health history. You may have to authorize your insurer to access medical and other records to gather the necessary information and cross-check your answers. Insurers may also gather financial information, such as income, assets, debts, dependents, and bankruptcy history.

Medical exam

Many life insurance policies require a medical exam to verify that your application’s health information is correct. You can schedule the exam at your home or a medical exam facility.

During the exam, the examiner will gather more detailed information about your health history. They then collect vital statistics such as height, weight, and blood pressure. Examiners also collect blood and urine samples to analyze and confirm certain health and lifestyle factors.

Policies with no medical exam skip this step, shortening the process. However, they still often gather basic health information on the application.

Analysis of your personal information

After completing the application and medical exam, the underwriters evaluate all of your information. They analyze risk factors using this information to help determine eligibility, create a risk profile, and calculate premiums.

Insurance classification

Once the insurer analyzes your information, they give you an insurance classification. There are several classifications, ranked in order from lowest to highest risk:4

  • Preferred Plus: This represents the lowest risk.
  • Preferred: This represents the second-lowest risk.
  • Standard Plus: This classification represents the third-lowest risk.
  • Standard: This represents the fourth average risk for the general population.
  • Table ratings: These have higher premiums than average. This is generally for more complex health histories or riskier lifestyle factors.
  • Tobacco ratings: This classification represents the highest premiums. Most insurers classify you as a smoker if you have used nicotine or tobacco within the past year.

Tips to qualify for better life insurance rates

Here are some ways to reduce your perceived risk to the underwriters and qualify for more cost effective life insurance rates:

  • Maintain good health: A balanced diet and exercise can help you keep good health, avoiding health conditions that could raise premiums.

  • Manage health conditions: If you have health conditions, demonstrating your efforts to manage them can cause insurers to offer more cost effective premiums despite the condition. This could entail following your provider’s treatment and medication instructions as well as maintaining a healthy lifestyle.

  • Minimize certain lifestyle factors: Life insurers ask about your lifestyle habits on the application and test for some of these during medical exams. For example, smoking can dramatically increase life insurance rates. Greater alcohol consumption, drug use, and risky hobbies, such as skydiving or scuba diving, can also result in higher rates.

  • Raise your credit score: Although insurers may not use credit score in calculating premiums, it factors into your overall risk rating. A higher credit score may help you get approved more easily.

  • Apply as early as possible: The earlier in life you apply for life insurance, the better your rates may be. Most policies let you lock in your rates once the policy starts.

  • Shop around: Shopping around makes insurers compete for your business. Some may offer more cost effective rates on the same-sized death benefit. You can compare quotes and find the lowest rates on the coverage you need.

Get a life insurance quote today

Insurers examine many financial and medical factors to determine your premiums. This may seem overwhelming, but it also means you have many opportunities to improve in these areas and qualify for more cost-effective premiums.

Aflac considers a range of factors when underwriting policies to ensure you get fair premiums on the life insurance coverage you need. Speak with an agent today to learn more about your options and get a quote.

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