Life Insurance Underwriting

Life insurance can seem like a mysterious subject for those with no experience in the industry, but in the end it all boils down to risk. Buying insurance is all about risk – with the insured trying to mitigate the risk of living, driving, owning a home and other behaviors and the insurance company trying to balance the risk of everyone in their pool.

In order to achieve their goals and remain profitable life insurance companies employ a unique type of individual known as an actuary. Actuarial science is a very detailed field, and actuarial science training is extremely detailed and highly demanding. Many of the country’s best universities have well respected actuarial science programs, and competition for their limited slots can be fierce. The programs themselves are just as demanding, and the science behind the actuarial science degree is extremely difficult.

Once in the employ of the life insurance company actuaries use a number of different factors, including the information provided by the applicant, demographic information, actuarial tables and proprietary models developed by the companies themselves to determine the optimal premium levels for their applicants. In many case a detailed comprehensive medical exam is also part of the process, with the results of this exam playing a major role in the underwriting process.

It is important for life insurance applicants to keep in mind that they may be required to undergo a medical evaluation before the final policy is written. Life insurance companies have a vested interest in the health of their applicants, and they use a variety of health information to arrive at the premium quotes they provide to those applicants. In addition to the results of any required medical exam life insurance companies may also use information gathered from a detailed health questionnaire and the life insurance application itself.

One of the most important considerations in the life insurance underwriting process is the applicant’s past and present history of smoking and other tobacco use. With so many fatal illnesses directly attributable to smoking, tobacco use is definitely an important part of the underwriting process. Other potential health factors, including excessive alcohol use, hazardous occupations and dangerous hobbies are also part of the underwriting process, and it is important for applicants to be honest and up front when completing their life insurance application. If any material omissions are found the policy could become null and void, leaving the beneficiaries without the financial security they need.

The information provided on the life insurance application is extremely important, and it is vital that this information be completely accurate. The underwriting process used by life insurers depends in large part on the accuracy and completeness of the application, and it is important for those applying for life insurance to provide as much information as possible when completing the form. Providing accurate and complete information will help the actuaries employed by the insurance companies to provide an accurate premium quote and allow applicants to accurately compare the various term life insurance quotes they receive.