Underwriting Q&A

Q: What is the purpose of underwriting?  

 Once you have agreed on a life insurance product that was recommended by your agent, the underwriting process will begin.  The purpose of the underwriting process was designed to assist the insurance company on assessing costs, profitability, and qualifying parameters which is all based on mortality tables.  Underwriting guidelines are created by actuaries who use both science and mathematics to determine the insurability of the proposed insured.  Through underwriting the insurance company can protect itself from liabilities such as premature death, or shortened life expectancies due to medical issues, thus insuring long term benefits for those who qualify.  Because those who are insurable statistically live longer than those who are not, insurance companies can offer accelerated death benefits while protecting their own interests.  To learn more about why underwriting is necessary within an insurance policy, please feel free to contact us at about universal life.com.    

Q: Why is underwriting necessary for a Universal Life policy? What purpose does it serve?

Q: Why is underwriting necessary for a Universal Life policy?  What purpose does it serve?

A: Underwriting in General

With respect to a Universal Life policy, before the benefits are enforced the underwriting process for the proposed insured must be completed.  The purpose of the underwriting process is to help protect the insurer, or the insurance company, from unnecessary liabilities.   The underwriting process helps the insurance company determine the eligibility of benefits based upon both the health of the proposed insured and the mortality table ratings.    Once approved, all universal Life policies come with an accelerated death benefit that is payable tax free to a beneficiary at death.  Typically, both the younger and healthier the insured is; the higher the death benefit the insurance company is willing to pay.  The entire underwriting process can be a quick as a couple of weeks or as long as a couple of months depending on how much information is needed in order to complete the underwriting process.  To learn more about the underwriting process please feel free to contact us at About Universal Life .com.  

Q: What is the first step in the underwriting process with respect to a Life Insurance contract?

Q: What is the first step in the underwriting process with respect to a Life Insurance contract?    

A: The initial physical

Once an application has been taken on a permanent life insurance contract, the first step of the underwriting process is requesting the services of a paramed.  Typically, the agent will order the paramed services within the first 48 hours of the application.  The paramed is usually a medical professional, like a registered nurse, that is there to take a snapshot of your overall health at that moment.  The information the paramed collects helps the underwriter come to the conclusion of whether or not the subject is insurable.  The paramed will collect data such as height and weight measurements and drawing blood, just to name a couple.  The paramed will then send off that information to be analyzed by a medical laboratory.  When the medical laboratory receives that data they will start breaking it down on a systematic approach as requested by the insurance company.  Once that data is analyzed, it is then sent to the underwriter for interpretation.  To learn more about the underwriting process, please feel free to contact us at About Universal Life .com.

Q: Where does the insurance company access data on the proposed insured at the start of the application?

Q: Where does the insurance company access data on the proposed insured at the start of the application?

A: Medical Data

With respect to the underwriting process, once the application is signed and then sent in for underwriting medical data is then requested by the insurance company.  The insurance company will request data from the Medical Insurance Bureau.  The Medical Insurance Bureau, or the MIB, is a corporation owned by about 470 life insurance companies for the benefit of sharing pertinent information in order to complete the underwriting process.   The information received from the MIB is to help protect the insurer against fraudulent cases.  Some of the information provided includes how many times the proposed insured has been underwritten and the outcome of each application.   This information is deemed highly confidential and cannot be accessed by any 3rd parties without a court order. Since every case in underwriting is different, the underwriter will use discretion in order to determine if any other information is necessary to complete the underwriting process.   To learn more about the underwriting process and how insurability is determined, please feel free to contact us at about universal life.com.

Q: What is the best way to approach the underwriting process?

Q: What is the best way to approach the underwriting process?

A:How to approach underwriting

My name is Cal Burgess, founder of About Universal Life .com.  If and when you are ready to take advantages of a Life Insurance product, like an Indexed Universal Life policy, there are a few ways to help enhance or help ensure the underwriting process.  First off, it is highly recommended that you be as honest as possible with respect to your medical history.  What I always try to tell every one of my client’s is that we are trying to paint a picture.  Meaning, the more the underwriter understands your individual scenario the easier the process flows.  The truth is that most delays within underwriting could have been avoided if the application was approached correctly.  Another way to be proactive during the underwriting process is to get involved.  It never hurts to put a bird in your doctor’s ear letting them know that additional information about your medical history may be ordered through an APS report.  An APS report is an Attending Physician’s Statement that is commonly ordered by underwriters in order to clarify an issue or to request additional information.  To recap, when approaching underwriting, effective communication is the key.  The more the underwriter understands about your individual circumstance, usually the smoother the process.  To learn more about a practical way to approach underwriting, please feel free to contact us at about universal life .com.  

Q: What is an APS report, and when is it necessary for the Insurance Company to order the report?

Q: What is an APS report, and when is it necessary for the Insurance Company to order the report?

A: APS Reports

My name is Cal Burgess, founder of About Universal Life .com.  When talking about the underwriting process of a life insurance contract, it is important to understand why additional information may be needed.   Sometimes information that comes back from Medical Information Bureau will need further clarification, or will fail to provide the necessary details in order to determine insurability.  In situations like these, most underwriters will ask for additional information from a doctor in an APS report.  An APS report is an attending physician’s statement.  Since the underwriter is requesting this information from the physician, sometimes there can be a delay on getting the information back to the underwriter depending on the timing of the request.  For example if the initial findings on a proposed insured show that the individual had knee surgery (knee replacement) 5 years ago,  an APS report would be needed to determine the range of motion of the knee; which could effect the level of insurability.  In this case the range of motion could limit the kinds of exercise that the proposed insured is able to do.  Although this is not a life threatening event, additional information would be needed in order to determine the level of insurability.  In order to learn more about the underwriting process or APS reports please feel free to contact us at about universal life .com.