When you apply for life insurance, you will typically have to go through an underwriting process, wherein the insurance company will determine your eligibility, the level of risk in insuring you and the appropriate rate to charge. This can take anywhere from a few weeks to several months depending on the company. Bankrate’s guide will help outline what to expect from the underwriting process.

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What is underwriting in life insurance?

Life insurance underwriting is a process where insurance carriers assign applicants a classification. Your policy is priced according to certain rating factors and your assessed risk level.

Underwriters consider several factors to evaluate risk, such as your age, gender, hobbies and medical history. For example, if you are a smoker, that will be factored in, and you will likely face higher premiums than someone who has never smoked.

Learn more: Guide to life insurance

What does an underwriter do?

Simply put, a life insurance underwriter is the person or company who looks at all the data collected about you and determines if your overall risk level would be suitable for the company to insure. Based on the classification you’re assigned and other data, your eligibility for coverage and rate will be set.

Like all insurance rates, life insurance rates are based on risk. Underwriters examine the information you’ve listed on your application to determine how likely it is that you will pass away during the policy period and the insurer will have to pay your death benefit. Each company has proprietary underwriting guidelines to determine who they will and won’t write policies for.

How long does underwriting take?

Obtaining life insurance and going through the underwriting process is typically a multi-step process that takes two to eight weeks to complete. It may be longer than that if your potential insurer has questions or if they need to wait on a response from your doctor. However, there are several life insurers that offer accelerated underwriting for no-medical-exam policies, and some providers even offer same-day approval.

Life insurance underwriting process

As mentioned, the life insurance underwriting process helps insurance carriers determine your eligibility and calculate your premiums. Following are further details about some of the general steps involved.

Life insurance application

The process starts with you filling out an application. You’ll need to provide basic health information, such as your height and weight, along with information on your habits, such as whether you smoke, how much you drink and whether you exercise regularly. You’ll also provide information about the history of disease within your family (for example, if any relatives have been diagnosed with cancer). Some applications have questions about your COVID-19 history, too. Although COVID should not impact your eligibility, it may impact rates if you have long-term effects of the virus.

The application may also include financial information, as well as information about what you do for a living and how you spend your free time. The insurance company is trying to discover if you are engaged in any risky behaviors.

Say you work in the logging industry — one of the most dangerous professions in the U.S. A company may either turn down your application or increase your premium to reflect your risk level. This could also happen if you take part in certain activities, such as paragliding, skydiving or racing cars.

Life insurance medical exam

The next step is typically a medical exam, which usually comes at no cost to you. Keep in mind that this step would not apply for guaranteed issue life insurance, which does not have health qualifications. Additionally, there may be other no-medical-exam policies.

If you do have to complete a medical exam as part of your application, you will often either go to a lab to complete the exam or have a nurse or medical technician come to your home or workplace. The exam is used to verify the initial information you put on your application (like height and weight), take your vitals (pulse and blood pressure) and will probably include a blood test and urine test to check for drug use.

All of this is to determine the state of your health. If the exam determines that you are overweight according to your body mass index, have high blood pressure or any number of other physical ailments or potential health issues, your classification may be bumped down or you could be denied coverage. Following the medical exam, the underwriter may ask you for an attending physician statement from your doctor. Your doctor is the best person to speak about your health and can expand on the findings from the medical exam.

The final steps in the medical portion of life insurance underwriting include a prescription check to confirm any information you’ve given about drugs that you take, either short-term or for maintenance purposes. The underwriter may also check with the Medical Information Bureau (MIB), which is a nonprofit group that maintains confidential coded data about medical conditions and risk factors to alert insurers of potential omissions or errors in applicants’ reported medical histories. To protect individuals’ privacy, the MIB uses a system of proprietary codes rather than providing specific medical details. Any alerts from the MIB may prompt further investigation by the insurer but cannot alone justify an adverse underwriting decision.

Analyzing the information

Armed with all the information that’s been gathered, your insurer’s underwriter will now determine your final rating. Historically, their first step will be to consult an actuarial table. This is a document that shows life expectancy, or how likely you are to pass at a certain age.

The data on the actuarial table may be broken down by age and gender, as well as body mass index, and takes into account your height-to-weight ratio. Using this resource, the underwriter is able to see what the probability is that you’ll pass away while the policy is active. The higher that probability, the higher your premium will likely be. This is generally why permanent (whole) life insurance policies are more expensive than term policies. Permanent policies last for the duration of the policyholder’s life, as long as premiums are paid.

Note that many large life insurance companies now utilize data analytics through machine learning and artificial intelligence to expedite the underwriting process instead of reviewing actuarial tables.

Assigning an insurance classification

Finally, your underwriter will take everything into consideration and give you an insurance classification rating. There are five categories you can fall into for a life insurance policy:

  • Preferred plus or preferred elite: This means you’re in excellent health, have a great height-to-weight ratio and have minimal or no bad habits that would impact your health.
  • Preferred: This is for people who are in good health but not good enough to qualify for preferred plus or elite. This could mean you have a minor health issue, such as high blood pressure or high cholesterol.
  • Standard plus: With this classification, you will typically still be able to purchase a policy, but there may be some concerns about your medical record or a family history of disease. Your life insurance costs will likely be higher than if you were in one of the upper categories.
  • Standard: This is the category that most people fall into. Like standard plus, you’ll likely still be able to buy a policy, but you’ll probably have higher premiums.
  • Substandard: Substandard ratings involve a further classification system called “table rating.” Depending on how you score in that system, you will either be assigned to a policy with high rates or denied coverage. This is to account for a complex medical history or other factors that make you a higher risk to insure. If you find yourself in this category, you may want to seek a no-exam life insurance option.

Generally, these rating classifications exist for both smokers and nonsmokers. A smoker may qualify for a “preferred smoker” category, but the rates will typically be higher than they are for the “preferred non-smoker” category. It is important to note that depending on the health issue or reasoning for a high rating, asking for a re-rating at a later date (if your company allows it) or applying for a new policy once you are in better health, could potentially save you money on your premium.

Frequently asked questions

    • Some factors that underwriters consider when evaluating a life insurance application are lifestyle, age, gender, medical history and occupation. Risky lifestyle choices, such as skydiving or cliff jumping, could increase your risk profile and the cost of life insurance. Your medical history, including height and weight, prescribed medications, diagnoses and history of surgeries, also determine your risk. Your occupation factors in too, as those who work risky jobs may have a greater chance of passing away than those who work other less-risky jobs (i.e., clerical or administrative positions). Basically, life insurers will consider any factors that might impact how long you are likely to live.
    • The best life insurance company is different for everyone. Before searching for a life insurance company, determine your coverage needs, including desired optional benefits (aka riders). Once you have your coverage needs figured out, consider what is most important to you in a life insurance company. It could be its claims process, financial strength, policy offerings or customer satisfaction. Understanding your needs and working with a licensed agent or financial advisor might help you find the right fit.
    • If you knowingly lie on your application to get lower premiums, that is life insurance fraud. You could be denied coverage, fined or even face jail time. Additionally, your fraud may be reported to the Medical Information Bureau, which would then alert other companies of your fraud if you apply for coverage in the future. Small unintentional mistakes, like your weight being off by a few pounds, are not considered fraud and not likely to cause a denial of coverage but may result in higher premiums.
    • How long the underwriting process takes for life insurance depends on your application, health, occupation and lifestyle. The more information the underwriter needs to determine a rate, the longer it can take. Expect the underwriting process to take between two to eight weeks for policies requiring a medical exam or even longer for more complicated cases. The life insurance company might offer you temporary coverage that will be in effect until a decision is made on your life insurance application. There are also insurers who offer accelerated underwriting for no-medical-exam policies, which have quick or same-day approval.
    • Life insurers will likely ask you about your COVID-19 history during the application process. While having the virus itself should not directly impact your eligibility, long-term effects of the virus, such as shortness of breath, may factor into your premium.
    • When it comes to underwriting between group and individual life insurance, there are quite a few differences. Individual life insurance policies require an underwriting process. Typically, each policyholder must disclose their medical history and may undergo a medical exam, and policies are priced according to your assessed risk profile. When it comes to group life insurance policies, there is usually no individual underwriting requirement since coverage is provided to a larger group of people. The underwriting process may instead evaluate characteristics of the group as a whole. Therefore, the standard policy does not consider your individual health or medical history. In some cases, such as increasing your coverage limit, there may be a brief medical questionnaire to demonstrate evidence of insurability.