Understanding Life Insurance Underwriting
Once you get your life insurance quote, there is just one thing standing between you and the issuance of a life insurance policy. And that thing is life insurance underwriting.
What is life insurance underwriting?
Life insurance underwriting is the process of evaluating the amount of risk that you present to the insurance company. When a life insurance company looks at you as a potential policyholder, it must decide how risky your life is and how likely you are to die before they've gotten enough premium payments from you in order to make a profit on the policy.
In order to do this, the insurance company underwriter will look at your age, weight, smoking status and height and determine statistically how likely you are to die. Next, they will factor in your health history, family health and attempt to determine how risky the health history makes you.
The next step is to look at how all of these factors can work together to create combined future health problems and if anything in your health history will work to make you less likely to develop these future problems.
Lastly, the life insurance underwriter will look at your lifestyle and determine whether or not that makes you more or less of a risk. They will look at your moral turpitude, your vocation and your hobbies (avocation). The more risky a lifestyle you lead, the more likely your policy will be declined or charged higher rates.
As an example, when looking at your moral turpitude they might draw conclusions about your lifestyle based on the amount of drinking you do, any sexually transmitted diseases you might have had or any driving-related issues you have had.
When looking at your vocation, the life insurance underwriters might consider any travelling you do for work, what type of work you do and the amount of risk it presents to your life based on the actual duties of the occupation and the kinds of situations your work might put you in.
Lastly, looking at your hobbies, your life insurance underwriters will determine whether there is any kind of innate danger within your hobbies. For instance, if you enjoy finger painting, then you have a very low-risk hobby with little opportunity for injury or death. But if your hobby is motocross rating, then your mortality opportunities are exponentially increased and your underwriters will be more likely to rate or decline your policy.
by: Haz Duell