What Is The Underwriting Process?
On an application for life insurance, a life insurance company typically asks medical, family history, lifestyle, occupation, and financial questions about the applicant. This process is called underwriting. Each life insurance company has its own underwriting rules, which vary significantly between companies and policies. How Do Life Insurance Companies Use The Underwriting Process?The underwriting process is designed to categorize applicants who seek life insurance policies. After the application and medical information about the applicant is completely gathered from a background check of the applicant, the underwriters make their underwriting decisions in two stages. - First Stage - The underwriters decide whether an applicant qualifies for life insurance at all: For example, if an applicant has had cancer within the past year, he would not likely be able to buy underwritten life insurance at any price
- Second Stage - The underwriters classify the risk of the applicant to determine the price of the coverage: Most applicants receive either a "preferred" classification (intended for those who are below average risks) or a "standard" classification. If a person has a history or characteristics that suggest he is riskier than average, his policy is considered "rated" and offered at a higher price
What Are Some Categories Analyzed By A Life Insurance Company During The Underwriting Process?During the underwriting process, a life insurance company uses a series of factors to determine an applicant?s risk of death. Some of the factors analyzed during this process include: - Serious illnesses or various other health conditions: This may include being overweight, smoking, excessive drinking, illicit drugs, etc?
- A negative family history of illnesses
- Occupations: Generally, the more dangerous the occupation (i.e. demolition experts), the higher the rate that an insurance company will charge.
- Hobbies: Similarly, the more dangerous the hobbies of an applicant (i.e. hang-gliding, sky-diving, etc?), the higher the insurance rate.
- Bad Driving Records
- Being ?over-insured?: If an applicant seems to have a large amount of insurance relative to his financial circumstances and needs, then he may be charged a higher rate.
Do I Need An Attorney If A Life Insurance Company Has Unfairly Denied Me Life Insurance Coverage?
Although life insurance companies have a broad range of categories they can use to determine if an applicant is eligible for a life insurance policy, there are still some factors such companies cannot consider when determining eligibility. One example is a person?s race. If you feel you have been unfairly denied a life insurance policy, you may want to contact an attorney experienced in insurance matters to see if you are entitled to any damages for being unfairly discriminated against. An lawyer can advise you of your rights, and advise you of what course of action you should take. |
