|
The
terms "underwriting" and "underwriter"
are typically heard when discussing the
enrollment process for term life
insurance. Aside from the ominous
sound, what do these terms really mean?
Let's take a quick look at the
underwriter's role in applying for term
life insurance.
Underwriting is essentially the process
by which a carrier determines if you are
eligible to qualify for term life
insurance coverage and at what
health
class (which directly translates into
"what rate"). The underwriter, in
this sense, is the person who reviews
your information based on carrier
guidelines and practices (called
underwriting guidelines in keeping with
the theme). Your part of the
process typically consists of completing
the life insurance application and
taking the paramedical exam. The
evaluation of this information then
falls to the underwriter, an employee of
the carrier.
The
bulk of factors that affect your
eligibility status are pretty well
spelled out in these guidelines.
For example, these carriers will usually
have an explicit
height to weight ratio
chart that determines health class along
clear lines. Smoking (including
type, for how long, and at what volume)
is also pretty well delineated.
These same guidelines will list a range
of health issues with parameters for
contributing facts such as how long
sing/symptom/treatment free.
Cancer is an example where type of
cancer, severity (state in the case of
cancer), treatment results, and time
cancer-free will all be factored in.
Not
everything is so black and white and the
underwriter is the person that has to
determine the shades of gray for an
applicant's health status and history.
Think of all the combinations of health
issues and you see how a person needs to
be involved. A person could only
have
high blood pressure which obviously
is a concern, but much more so if found
in conjunction with high cholesterol,
obesity, and a family history of heart
attack/disease. The underwriter is
the person who tries to align your
personal mortality risk with the
carrier's health classes.
The
underwriter uses information from your
health questionnaire on the application,
family medical history listed, the
results of your paramedical exam, and
even outside information such as from
the
MIB (Medical Information Board).
The MIB is an repository of medical
information shared and created by life
carriers that they each access to verify
information or use to detect potential
fraud. For example, if you had a
history of heart disease or left off
information relating to this disease
with another carrier, it might appear at
the MIB. The underwriter may use
all these potential sources within the
framework of the carriers underwriting
guidelines to establish your
eligibility.
As
the applicant, it's important to present
all your information in an honest,
complete, and direct manner. It
does not serve your you well to get a
better rate and/or approved with
missing/false information only to have
your coverage rescinded or benefit
declined. We have seen this occur
and it a horrible position to be in.
You can find more information on how the
carriers view certain health issues in
our
life insurance
health class article.
|
Term life insurance
quote
