Portions of this article were drafted using an in-house natural language generation platform. The article was reviewed, fact-checked and edited by our editorial staff.

Underwriting is a crucial step in the life insurance process that determines an applicant’s insurability and premium. It involves evaluating various factors, such as age, health, profession, and lifestyle, to determine the risk level of the applicant and offer an equitable premium. The underwriting process can take less than an hour up to several weeks and may involve a series of steps, including an application, medical exam and data analysis. While individual and group life insurance underwriting have some similarities, there are also key differences. Bankrate’s team of insurance experts delves into the details of underwriting in life insurance and how it affects policyholders.

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What is underwriting in life insurance?

Underwriting is a process where a life insurance company evaluates an applicant to determine whether they are insurable and how much they should pay for their policy. During underwriting, several factors are considered, such as the applicant’s age, gender, current health condition, past medical history, profession and lifestyle habits. The ultimate goal is to offer a premium that is most equitable for the individual’s risk profile, considering their potential lifespan and other significant factors.

Learn more: Guide to life insurance

What does an underwriter do?

Simply put, a life insurance underwriter is a person or company that looks at all the data collected about you. 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. Based on the classification you’re assigned and other data, your eligibility for coverage and rate will be set.

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Bankrate insights
Artificial intelligence has changed how some insurers view the life insurance underwriting process. In February 2024, Nationwide announced that it would partner with AI software DigitalOwl to help expedite the underwriting process. If the numbers are any indicator, other major life insurance companies won’t be far behind. While AI may help to speed along the process in some cases, there are still a couple of hurdles it needs to overcome before it becomes more of an industry standard.

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

Standard life insurance underwriting is a meticulous process, where several stages are involved to assess an applicant’s risk and determine their premiums. Here’s a step-by-step breakdown of what you can expect:

Life insurance application

The life insurance underwriting process begins with an application where you share information about your personal life, health and finances. These details include elements as basic as your name, address, job, employer, net worth, height, weight and birth date and as specific as your lifestyle habits like smoking, drinking and exercise.

High-risk careers — like being an airline pilot — or hobbies like skydiving may be viewed unfavorably by life insurance underwriters. This means you could pay a higher rate. Smokers and other applicants with chronic health conditions may also face higher premiums compared to healthy, non-smoking applicants. Being truthful and accurate when filling out your application is crucial to prevent complications when the policy is issued or when a beneficiary makes a claim.

Life insurance medical exam

After submitting your application, you may need to undergo a medical examination to verify your health status. This medical check-up, often known as a paramedical exam, is conducted by an accredited paramedical expert and typically includes standard tests such as height and weight measurements, blood pressure checks and the collection of blood and urine samples. These tests aim to uncover any potential health concerns, including drug use and common health ailments like elevated cholesterol or blood sugar levels. The outcomes of this exam are a significant contribution to the underwriting process, which evaluates the risk involved in insuring you based on your health condition.

Information analysis

Following the medical examination, the underwriter reviews your prescription history and refers to the Medical Information Bureau (MIB) to validate the information provided about your medical past. The underwriter uses actuarial tables and possibly even data analytics to evaluate your lifespan and categorize you.

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 are 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.