A Look at Life Assurance Underwriting

As a background, remember that life assurance is protection against an event that is sure to happen, the uncertainty is just when it will happen. This means that a policyholder is expected to receive the proceeds of the life assurance policy – either at the time of death or at the time of the policy’s maturity.

What Is Underwriting?

Now, to help the insurance company determine whether to accept your life assurance application or in other words to take on the risk you present, they will first underwrite the policy. Underwriting is the process of studying the risk you present – whether you are to be considered a standard risk (with standard premiums applied) or you need to pay higher premiums because of a higher than normal risk of your death at an earlier period. Aside from setting the premiums to be charges, underwriting also determines if there are necessary restrictions or exclusions to be applied to your case.

You will notice that when you apply for a life assurance policy, you will need to answer some questions about:

  • Your finances
  • Your health
  • Your lifestyle
  • Who is taking on a life insurance policy for you and what your relationship is with them

Some Underwriting Considerations

Here are some things that an underwriter from the insurance company will consider:

  • Finances.

    He will look into your income and basic financial information to see whether your income (and expenses) warrants the amount of assurance you are applying for. This will prevent people of medium income from taking out large policy amounts for themselves for unscrupulous purposes. Looking at your finances will also help determine the kind of risk you present. If you are financially stable, this could mean that the probability of your paying premiums on time is high.

  • Smoking habit.

    Do you smoke? If you do, you are more likely to pay more premiums for that habit since smokers are considered to have higher health risks.

  • Lifestyle and Occupation.

    What is your occupation? Is it considered a hazardous job? Take note that a person working as an office clerk is considered a lower risk compared to a person working as a pilot. What are your hobbies and sports? Do you indulge in dangerous sports such as scuba diving or sky jumping?

  • Medical history.

    The underwriter will check your family’s health history – whether your family has a tendency towards acquiring a chronic illness such as diabetes or heart disease. You may be required to undergo a medical exam or the insurance company may ask for your medical records from your doctor.

To protect your loved ones for less, fill the form on the right to get your life insurance quote.