Life insurance provides peace of mind for you and your loved ones to help see you through life’s unpredictable events. Should the unthinkable happen to you, your life insurance policy guarantees that your dependents will be taken care of financially. Here’s what you need to know before selecting and applying for life insurance coverage.

What Is Life Insurance Underwriting?

Life insurance underwriting is used by a provider to assess the risk of insuring you. This evaluation determines your eligibility for coverage, the amount of coverage you can receive, and the premium rates you'll pay.

Underwriters aim to predict your life expectancy and understand your level of risk by analyzing your situation based on various risk factors. They’ll review your current health status and medical history to identify conditions that might affect your longevity. Lifestyle choices, such as smoking, alcohol consumption, and participation in hazardous activities, are also considered.

Underwriting helps insurers maintain a balance between offering coverage and managing financial risk. It also establishes accurate premium rates that reflect the likelihood of a claim being made. For you as a policyholder, this process provides fair pricing based on your risk factors so that you receive coverage tailored to your specific situation.

The Life Insurance Underwriting Process

The process of underwriting life insurance involves several steps to establish if a policy aligns with both your needs and the insurer's risk management strategies.

Step 1: Life Insurance Application

The underwriter’s process of evaluating your risk profile begins when you submit an application for coverage, which includes establishing your:

• Identity: Your full name, address, and date of birth.
• Health history: Any current medical conditions, past surgeries, and family medical history.
• Lifestyle details: Whether you smoke or have ever smoked, typical alcohol consumption, and participation in high-risk activities.

Step 2: Medical Exam and Health Questionnaire

To gain a deeper understanding of your health status, insurers often require that you undergo a medical examination and may ask for an addendum for certain health impairments. The medical exam will be similar to your annual physical and may involve height, weight, and blood pressure checks, as well as the collection of blood and urine samples.

Step 3: Medical Records and Lifestyle Factors

Next, the underwriter will analyze the factors you’ve presented along with your demographic information, such as age and gender to determine a precise risk assessment.

Step 4: Financial and Personal Risk Factors

Beyond your health, insurers may take into account your financial stability and personal history. For larger policies, they’ll look at your income levels, employment status, and any criminal records. A stable financial background and clean legal history usually correlate with a lower risk profile and a more favorable decision. Note that insurers may not always require this information, depending on the size of the policy you are applying for.

Step 5: Risk Classification and Finalizing Rates

After compiling and analyzing all the information you’ve given, underwriters assign you to a specific risk classification, such as Super Select, Select, Standard, or Substandard. For example, a 45-year-old non-smoker with optimal health metrics might be classified as Super Select, qualifying them for lower premiums. On the other hand, an individual with chronic health issues may receive a Standard or Substandard rating with higher premiums.

How Long Does the Life Insurance Underwriting Process Take?

The timeline of the life insurance underwriting process varies depending on the type of policy and your individual circumstances. Traditional, fully underwritten policies typically take 2 to 6 weeks to process. However, simplified issue policies, which forgo medical exams in favor of health questionnaires, can be completed in less than a week. Guaranteed-issue policies requiring no medical information often receive approval within minutes to hours.

Several factors influence the underwriting timeline:

• Incomplete or inaccurate application information can lead to delays.
• The time taken to schedule and complete medical exams impacts the process.
• Larger policy amounts often require longer evaluations.

There are a few proactive steps you can take toward a smoother underwriting experience. When you fill out forms, make sure all the information you provide is complete and accurate, including openly disclosing medical issues or drug use to prevent unforeseen delays. Choosing the appropriate type and amount of coverage that aligns with your needs can also streamline the process. When in doubt, consult with a knowledgeable insurance representative for assistance and to expedite the process.

What Happens If You Are Denied Life Insurance Coverage?

Being denied life insurance can be disheartening, but it's not the end of the road. There are many possible reasons for denial and several steps you can take if that happens.

Common Reasons for Life Insurance Denial

Life insurance applications can be declined for various reasons, including:

• Health history: Chronic illnesses, such as diabetes or heart disease, can lead to denial.
• Age: Older applicants may face higher denial rates due to increased risk.
• Lifestyle choices: Engaging in risky activities, such as skydiving or having hazardous occupations, can impact eligibility.
• Application errors: Providing inaccurate information can lead to rejection.

Steps to Take After a Denial

If your life insurance application is denied, consider the following steps:

• Understand the reason for denial: Contact the insurer to get specific details about the denial.
• Review and correct your information: Review your application details for accuracy and correct any discrepancies you find.
• Improve your health and lifestyle: Make positive changes, such as quitting smoking or managing chronic health conditions.
• Explore alternative policies: Consider policies with less stringent requirements, such as guaranteed acceptance life insurance.
• Consult a life insurance professional: Get help from an insurance expert to find suitable coverage options.

Armed Forces Mutual Can Help

When it comes to life insurance coverage, Members have access to their own Digital Vault for secure essential document storage, our hallmark Survivor Assistance Services that come with every policy, and more. Contact us today to learn more about our life insurance options and Member benefits for servicemembers, Veterans, and military families.