How Life Insurance is Assessed

Before an insurance company will offer life insurance cover to an applicant, they will be required to complete an application form. The application form goes into comprehensive detail in regards to applicant’s medical history. There will also be questions in regards to the applicant’s employment situation, sports and activities and other life insurance products that the applicant might already have in place.

Once the application is completed it will be forwarded to the insurance company to be assessed by the underwriters. Depending on the answers given, the insurance company might require additional information on certain things. For example; if the applicant disclosed that they have a history of high blood pressure, the insurance company may request a doctor’s report to see how the condition is being managed. Additional information such as a doctor’s report is not uncommon when it comes to life insurance.

Apart from medical history the insurance company will also assess life insurance based on the amount of cover applied for and if it is justified. Insurance companies are in the business of wealth protection, not wealth creation. This means, for example; if the application was to apply for over one million dollars life cover and is not currently employed, the insurance company might make a counter offer of a smaller amount.

The information that is gathered by the insurance company is strictly confidential and is only viewed by the individuals whose task it is to assess the application. Information cannot be forwarded to other companies without written permission from the life insured.

Many life insurance applications are assessed at standard rates, meaning that they do not require any further underwriting or additional information. This means that all the life insured has to do is either complete the signing pages for notify the company verbally that they would like to proceed.

If further underwriting is required and non-standard terms have been offered, the insurance company will send a letter of offer to the client, which will state any loadings or exclusions. Increases in premiums are not uncommon when it comes to life insurance, increases are put in place by the insurer to offset an increased risk such as a medical condition or a dangerous sport or past time. If an increase has been placed on a policy it does not necessarily mean it will be there for the life of the policy. Many loadings can be reviewed if the life insured’s situation changes in the future.

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