What is underwriting and why is it important when taking out Life Insurance?
When looking to take out life insurance you would typically compare the market in order find the best policy. However, more so with life insurance you can base your decision on the cheapest premium as most providers are selling the same product. Your decision process should be based upon the sum assured, the term of the plan and whether you require any additional benefits, for example, do you wish to include waiver of premium or total permanent disability. All of these factors will also guide you to the most appropriate provider based on their underwriting criteria.
There are certain requirements that all life insurers will adhere to:
The application form - this is the starting point for any life assurance plan. Your application will ask you a series of questions about your current state of health and your past state of health. The insurer will want to know if you have ever had any major medical issues like cancer, heart attack or mental disorder. The next category of questions on application forms fall into the category of, “what has your health been like in the last 5 years”. This series of questions looks at the detail of health issues of the last 5 years and forms a key part of the underwriting process. Certain questions will carry more weight for the different products than others. The next section focuses on your health issues in the last year or two and whether that has had an impact on your wellbeing. Finally, the application form will concentrate on your family health history. That is, whether certain major illnesses or medical conditions have affected your immediate family. By this, the insurer is looking at your natural father, mother, brothers or sisters. You will only be able to answer this to the best of your knowledge. The crucial factor in answering these questions is that your do not leave out any material facts. Once the application is submitted, you will receive a copy of the information so that you can make any amendments.
The Underwriter - their job is to assess the information on the application form and decide if there is enough information to make a decision, to approve the application, to seek further information, to ask for a medical examination or to decline the application. In most cases, the application will not require further information and a decision is made. The underwriter will look at your health, height to weight ratio and family history. If these are normal you will be accepted on standard terms or if there is information that doesn’t meet standard requirements, there will be a loading of the premium to reflect increased risk or exclusion to part of the cover. Further medical information - this would normally be received from your GP or from an independent medical practitioner, then passed to the underwriters for a decision and approval as above. Whenever someone applies for a life insurance policy, the term underwriter becomes a questionable term in their minds. An underwriter is essential to the application process for life insurance benefits, without their incredible expertise, life insurance companies would be at a great lost.
Underwriting is the process in which a particular carrier determines if a person that is applying for life insurance benefits meets their eligibility guidelines. Different companies will have different guidelines that will need to be met before benefits can be issued.
The underwriter is the person on the other end that will review over your application and analyze your answers. Underwriters are also the people that have the option to ask for more information on your application and require you to take a physical examination. The approval of your life insurance policy is going to rely solely on what the underwriter has to say.
This is one reason why the underwriter is extremely crucial to the life insurance agency as a whole. Without their incredible expertise and their diligent researching skills, many life insurance agencies would end up releasing benefits to people that they should have never rendered benefits to in the first place.
There are certain things that an underwriter will look into when it comes to approving or denying your application for benefits. Different aspects about yourself in regards to your age, height, weight and medical history are all looked at by the underwriter. The underwriter may also analyze your family’s medical history in order to gather a general idea when it comes to the life expectancy of your family, and the different medical ailments that your family members have faced.
The job of an underwriter is not only important to the life insurance company that they provide services for, but it is also important to everyone that is applying for benefits. If it were not for the underwriting services that the underwriter offers policies which should not be approved for benefits would receive coverage. This would actually make the life insurance policies that companies offer a lot more expensive.
If an underwriter was not present throughout the process, the life insurance field as we know it would no longer be personalized like it presently is. Underwriting services help the life insurance agencies see not only the black and white writings found on applications but it also helps highlight the gray areas of the process as well.
Underwriting in laments terms is a simple evaluation process that is done by a person or a group of people in order to ensure that you qualify for the life insurance policy that you are seeking. Underwriting is important when taking out life insurance because it helps life insurance agencies eliminate accepting high risk cases.
Since, life insurance agencies are told about these high risk cases they can then attempt to make the right choices when it comes to offering coverage. Underwriters also assist life insurance agencies with keeping their rates for their services at a minimum amount, thus ensuring that the coverage remains affordable for people from all different walks of life.
