Life Insurance Underwriting: What Exactly Do Life Insurance Companies Care About?

by Bestow Team | October 04, 2021

6.5 Minute Read

If you’re even just the tiniest bit familiar with insurance, you probably know that there are certain factors that may impact how much you pay for coverage. Most insurance products (car, homeowners, business, etc.) require some sort of evaluation before insuring you. This is known as the underwriting process. 

The life insurance underwriting process can feel pretty personal. Insurance companies want to learn as much about you as possible before insuring you for hundreds of thousands of dollars. So, most life insurance companies insist on a medical exam, as well as reviewing your medical history and current lifestyle. 

What Exactly Do Life Insurance Companies Care About?

The risk factor and underwriting vary from company to company. While it would be impossible to name every single risk factor that life insurance companies consider, we’ve grouped the most popular ones into three major buckets: your basic profile, your history, and your lifestyle.

1. You 

Your Basic Profile – Age, Gender, Height, Weight

Your life expectancy or age plays a factor because as we get older, our likelihood of dying increases. A 35-year-old female is considered a higher risk than a 25-year-old. However, there’s one exception. Males in their low 20s are actually considered riskier to insure than males in their 30s — risky driving habits are to blame.

When it comes to gender though, life insurance coverage premiums tend to favor women over men. Women live longer than men, so they’re considered less risky.

Insurance companies will also look at your height and weight, but don’t get too hung up on the numbers on the scale. While there are certain health conditions that are associated with a higher body mass index (BMI), if you are generally in good health, a few extra pounds shouldn’t get in the way of lower life insurance premium.

2. Your History

Your medical records, prescription history, family health history, criminal history, and driving history.

Do you have high blood pressure, heart disease, or some other pre-existing medical condition? Are there any health issues in your family history? What prescriptions are you currently taking?

This is going to sound morbid, but this is information that insurance companies need in order to determine, well, the probability that you may die during your policy term.

This is another reason why young adults are encouraged to lock in a low monthly rate now. A healthy 20-something is considered a lower risk to insure, compared to someone who is older with documented medical conditions.

Other things in your history life insurers look at:

  • Your driving records

    If you have a history of driving under the influence, that’s high risk behavior. You’ll likely be ineligible for a policy with many insurance companies.

  • Your criminal history

    If you have recent criminal activity on your record, that might also make it harder for you to get approved for a life insurance policy.

3. Your Lifestyle

Your personal finances, habits, hobbies, and travel.

Part of your risk assessment includes your current financial situation, habits, and hobbies. 

Insurers look at the data behind your credit score (like timeliness of payments or if you’ve filed for bankruptcy), but not your credit score itself. Instead, they use this data to assign their own score, called a “mortality score”, to determine your level of risk. To be clear, the request for this data is only a soft credit inquiry, so this doesn’t impact your credit.

In regards to habits, we’re talking specifically about alcohol and tobacco use. We’re not here to remind you of the dangers of smoking or drinking excessively. We all know that there are a lot of risks involved with each of those habits.

Most hobbies are fun and safe. Others, not so much. Are you an avid deep diver? Do you race cars or rock climb outdoors? Those are high risk hobbies and might make it harder to get an affordable life insurance policy.

Similarly, foreign travel itself isn’t bad, but if you travel to a country that is in the middle of a war, you’ll have to find an insurer that writes life insurance policies specifically for high-risk travel.

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What Does The Underwriting Process Look Like?

The typical life insurance underwriting process takes anywhere from four to six weeks, though this varies depending on the company. Here’s an example of a standard process insurance underwriters may use to help determine coverage eligibility and premium rates. 

Medical Information Bureau (MIB) Check

The MIB is an independent group that checks and verifies medical records. Before an insurance underwriter looks at your life insurance application, the MIB ensures that all relevant medical conditions, treatments, and prescription records are accurate and included in the application. 

Phone Interview

Depending on the life insurance company you go with, you may need to hop on the phone for a quick interview. It’s typically a short, 15-30 minute call meant to help verify your life insurance application. 

Don’t worry — this interview is not meant to trip you up. The interviewer will simply go over everything in your application. You’ll likely talk about your health history, your personal finances, as well as your hobbies and lifestyle. 

And remember: don’t hesitate to use this time to ask any questions of your own. This is the perfect time to make sure you are applying for the right type of insurance and the right coverage amount. 

Medical Exam

The medical exam, also called the paramedical exam, is an exam performed by a medical professional provided by the life insurance company. This exam is free to you, and the results are sent to the insurance underwriter for evaluation. 

The exam typically takes around 45 minutes and includes basic measurements like height, weight, and blood pressure, as well as other tests like blood and drug testing. The results of these tests can help underwriters assess your risk of stroke, heart disease, and other ailments. 

Attending Physician Statement (APS)

If the insurance underwriter sees anything worrisome from your medical exam or is unsure exactly what to think about something, they’ll order an attending physician statement, where a doctor will give a summary of the report from their point of view. 

Motor Vehicle Report 

A motor vehicle report includes all traffic citations and accidents from the last seven years. A clean driving record usually means lower premiums, whereas a pattern of traffic violations and accidents could mean higher rates.

Why Does The Underwriting Process Impact Premium Rates?

Insurance is all about risk. This is the likelihood that an insured event (in this case, death) should occur throughout the duration of the policy term. The higher likelihood you pass before the end of your life insurance policy, the more you will pay in life insurance premiums.  

How To Find Life Insurance As A High-Risk Candidate

During underwriting, the insurer will assign you, the applicant, a risk classification. If you are a higher risk, you can likely still get a policy, but you’ll pay higher premiums than someone who fits in the elite or good risk class.

If you’re extremely high risk, you’ll have to work with an insurer that writes specialized policies for high risk individuals. A licensed insurance agent will know which insurance companies do just that. You can also sign up for basic group life insurance through work if your employer offers it.

Some life insurance carriers or companies specialize in offering both permanent or term life insurance coverage to people who are deemed high risk. For example, on-duty military service members may have a hard time finding a life insurance policy that would cover death in active war zones, so they may have their own group insurance policy.

Apply Today

Now that you have a better understanding of how life insurance underwriting works, feel empowered and take action today to help protect the financial future of your loved ones. With Bestow, you can apply entirely online in just minutes, and there’s no medical exam needed. Start the application process today.