There is a lot that you should learn about life Insurance before purchasing a policy. One key part of life insurance that many people misunderstand is the Underwriting process. This two part post hopes to offer up the finer details of underwriting, so that you can make a better informed decision about the type of policy that you choose.
Part one of this post looked at what underwriting is, as well as what the different types of underwriting are. Part two will focus on the process of underwriting and the benefits of an underwritten life insurance policy.
The Underwriting Process for Life Insurance
As mentioned in the first part of this post, underwriting is used to determine a person’s risk and whether or not their policy Application will be accepted. Generally speaking, this process starts during the application stage to vet potential applicants. Things that determine what will be looked at while underwriting include an applicant’s medical history, their age and their insurable amounts.
A standard underwriting process for life insurance can be broken down into the following steps:
- Applicant honestly completes life insurance application form.
- The underwriter will review their application using their own underwriting guidelines.
- If necessary, the underwriter will request further details, medical histories or examinations.
- With all of the reports and tests returned to the insurer, the underwriter completes risk assessment for applicant.
- A decision is made regarding the application – it could be accepted, rejected, excluded or loaded (which requires increased premium).
Timescales for Life Insurance Underwriting
There is no set timescale for underwriting because it is very much case dependent. There are a great deal of factors that need to be looked at before a decision is made, so getting a response for your application might take some time. Things that might be looked at include your medical history, age, family history, BMI, as well as your occupation and hobbies.
The Problems of Non-Underwritten Life Insurance Policies
As we have looked at, retail policies are almost never fully underwritten at the application stage, but instead when a claim is made. This has a lot of negative issues that might help you make a decision about choosing a direct policy over a retail one. Non-underwritten policies often lead to poor outcomes when a claim is made because they tend to include very wide exclusions in policies. As a result of waiting until a claim is made, and their wide exclusions, there is often a great deal of uncertainty regarding the outcome of a claim.
The post Everything you Need to Know About Underwriting in Life Insurance Part 2 appeared first on Superhero Insurance.