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Insurance Underwriting Process
“Underwriting” is a term that is used by insurance companies that describes the insurance company’s process for reviewing and approving, modifying, or rejecting your life insurance application.
An “underwriter” is a person who is specially trained in evaluating risks of life insurance policy applicants and who assigns the “correct” rate classification for your insurance policies.
When you apply for a life insurance policy, your application goes to the insurance company’s underwriting department, where the process begins. You will be required to take a paramedic examination (at the insurance company’s expense) and the insurance company may request a copy of your medical records, as well as information from the MIB Group, Inc. (MIB).
Once the insurance company’s underwriter gathers all of this information, a decision will be made about your application for life insurance or disability insurance. You will either be approved for coverage, asked to modify your coverage, or be declined for coverage.
When you apply for life insurance, you’ll be required to have a paramed examination. The results from this examination help insurance company underwriters to determine your health status. Within a few days, you’ll be contacted by a trained paramed examiner who will give you specific instructions, such as whether or not you can eat or drink before the exam, and other details. The nurse will come to a place that’s convenient for you (your home, your office or other location) to conduct the paramed examination.
During the exam, the paramedic will:
- Draw blood from your arm;
- Collect a urine sample;
- Determine your height and weight;
- Check your pulse and blood pressure;
- Depending on the amount of coverage you need, possibly complete an EKG
The exact steps of your exam will depend upon your age, your past health history, family history, and the amount of insurance that you’re applying for.
Things like your cholesterol levels, glucose levels, red and white blood cell counts, etc. The insurance company will also test your blood for the antibody to HIV (Human Immunodeficiency Virus), as well as for the presence of drugs and/or nicotine.
The insurance company that you are applying with will have your blood and urine samples analyzed by an approved lab. The underwriter that is assigned to your case will receive these confidential results. You will be given a copy of all of the important disclosure documents that detail your rights and any privacy policies related to how the insurance companies handle your health and other information.
In most cases, the insurance company will forward a copy of your results upon request. There are certain instances where they will only send your results to your personal physician, who is better equipped to interpret the results for you.
You mentioned this agency, MIB. Who are they and what role do they play in the underwriting process?
As part of the underwriting process, the insurance company will gather information from the MIB Group, Inc. The MIB is comprised of a group of U.S. and Canadian life insurance companies whose primary purpose is to detect, and deter, fraud that may occur when someone applies for life insurance.
MIB’s primary purpose is to protect Member companies (the companies that InsuringIncome works with) from proposed insureds who knowingly or unknowingly leave out important information concerning their insurability on their life or disability insurance applications.
When a person applies (completes the application) for a life or disability insurance policy, he or she is asked a number of questions that help to classify him or her as an insurance risk. In the case where an applicant either forgets to answer a question correctly, or fraudulently completes questions, or knowingly leaves out information on the application, MIB provides an alert to the insurance company regarding information that may be relevant in the risk assessment process.
MIB saves its Member companies an estimated $1 billion annually by enabling them to avoid fraudulent insurance applications and the costs of unexpected claims. These savings are potentially passed down to consumers in the form of lower premiums.
An underwriter will review your life insurance application information and compare it to what is in your MIB file. The information in your MIB file is used only as an alert. No underwriting decision can be made solely on the basis of the MIB report.
Please visit their website at www.mib.com for additional information, or contact us to ask specific questions.
Based upon the information provided on your life and/or disability insurance application – as well as the results of your paramed exam and the information included in the MIB record – an underwriter may request additional information from your primary physician. The insurance company will ask you to sign a release form that allows them to contact your physician(s) in order to obtain copies of your medical records. All of your information will be treated as “confidential”.
That’s a lot of personal information that the insurance company will have about me. How do I know that my information is secure?
Rest assured that your privacy is of the utmost importance. Insurance companies have policies and procedures in place that ensure your information is only handled by authorized personnel. The security of your information is something that is taken very seriously.
At the end of the underwriting process, you will be determined to be either:
Approved as Applied: Great news! Your life insurance application has been accepted! Coverage will not take effect at this point. We will pass the information along to you as an email or phone call. We can then work with you to determine the final design of the policy, along with the premium. After a policy is issued, we have you sign the amendment and general policy delivery forms. Payment is submitted along with the signature pages and coverage becomes effective when the insurance company processes everything and states that all items are in good order.
Modified: Looking good! Your life insurance application will be accepted once you agree to any modification(s) offered by the life or disability insurance company. You could be approved for an amount of coverage that is less than what was applied for. You could also see that the approved premium rate class causes the premium to increase. Prior medical conditions/history, hazardous activities (skydiving, piloting aircraft, etc.) could lead to further modifications/exclusions.
Declined: We’re sorry. Your medical condition (or hazardous activity history), based on your medical history and all of the information gathered by the underwriter, falls outside the established range of insurability for the life or disability insurance policy you applied for. Or, the amount of coverage you are requesting is greater than your financial need. The insurance company will send you a letter explaining the reasons your request was declined. We will also be sure to contact you to discuss the reasons for a decline, along with a plan of action.
Filed Inactive/Postponed: We’re sorry. But without all of the information requested, insurance companies are sometimes unable to make a decision on the case. The insurance company will send you a letter telling you what information is outstanding. If you are able to get this information to us in a timely manner, they may be able to reopen the case and give you a decision. In some cases, depending on the amount of time that has passed, additional requirements may be needed.
It depends. The insurance underwriting process can take anywhere from 2 weeks to 5 months, depending on the amount of information that the underwriter needs to gather and how quickly they receive the information from outside sources. On average, the process usually takes about 2 months from start to finish.
It helps the underwriters immensely if your application includes all of the required information. The process moves much more quickly when they have everything they need and they do not have to go back and ask for additional information. Providing specific doctor information – full name, addresses, specialty, and phone numbers – on all doctors that you have used in the past is particularly helpful. Your correct social security numbers, driver’s license, exact height and weight, meeting with the Paramedic as scheduled, and signature on all forms are helpful too.
I just received my insurance policy approval status. Why is it different than what I thought it would be?
Different people pay different insurance rates (premiums). The rate you pay is based upon your age, your health, and your lifestyle. For instance, if you skydive as a hobby, you are considered a higher risk than someone who feels that knitting is about as adventurous as it gets! The insurance company determined your & “risk class” based on the results of the insurance underwriting process.
The information provided on your application, information gathered from your physician and possibly the MIB report, the results of your paramedic exam and other important information, such as your driving record and personal habits are the basis for determining your life or disability insurance premium rate. Disability insurance policies will also include medical exclusions for particular high risk exposures. If you hurt your back in the past, you could expect that there will be a back exclusion. If the policy was approved with a back exclusion, and a claim is then filed for a back injury, payment could be denied. It is important to have exclusions reviewed over time as some can be removed with favorable health conditions.
Whom can I talk to if I have questions or want to know about the status of my life insurance application?
Please contact InsuringIncome any time during the life insurance application process. We’re here to help you get the insurance you and your family need. You can reach us at:
Monday – Friday 8:00 A.M. through 6:00 P.M. Eastern Time
160 Gould Street, Suite 310
Needham, MA 02494