Understanding the Life Insurance Underwriting Process
(post by Ken Smith, CLU, ChFC)
Recently, at the onset of the underwriting process, a prospective client disclosed he had been declined for coverage 18 months prior through another firm. The agent had taken a formal application, forwarded it to the carrier, and a declination of insurance was issued. Unfortunately, the fact that another agent did not complete the proper due diligence prior to beginning the underwriting process will likely have a long-term adverse impact on this individual’s chances of receiving future life insurance coverage – and if coverage is available, the pricing of that coverage.
When applying for insurance, any health or lifestyle conditions (such as adverse driving records or hazardous hobbies) are reported and coded into the Medical Information Bureau (MIB) system where they remain for seven years. Similar to a bad credit score, your MIB code can influence the decisions made by an underwriter regarding the availability and pricing of life insurance. Although MIB information is not the determining factor in the issuance of new coverage, it does influence the underwriter’s thought process. More importantly, actual codes exist for “suspicion” of a medical or non-medical condition. Unfortunately, your ability to secure coverage in the future could be influenced by a coded “suspicion” on your application.
Click here to continue reading about how carriers determine insurability, and pitfalls you can avoid during the application-underwriting process.
The information provided is for educational purposes only. This information is from sources we believe to be reliable, but we cannot guarantee or represent that it is accurate or complete. The opinions are those of the writer, and the opinions and information presented are subject to change without notice.