Underwriting 101

Before I started in the insurance industry I was a college student that also had a part-time job.  When I first started there, they passed out the usual information about the benefits package, which of course included life insurance.  Intrigued, I decided to look into it a little bit.  Now, as I went through the process of applying, they told me I would need to be underwritten.  Being the diligent college student I was, I thought that meant I needed to write a short paper on why I should be accepted for life insurance.  Boy, was I wrong…

As it turns out, underwriting is not a style of creative writing.  Underwriting is actually a very important part of the application process for multiple styles of insurance policies.  You may have seen underwriting in home mortgages, auto loans, medical insurance, and yes, even life insurance but, like me, didn’t understand its purpose.

When you get down to it, underwriting is mainly about risk.  The job of the underwriters is to evaluate the amount of risk that an applicant presents based off what their life expectancy is.  To do this, they determine your risk level based off a number of factors, such as:

  • Age
  • Gender
  • Tobacco Use
  • Health History
  • Prescription History
  • Etc

Based off of that and any other criteria they have, they put your information through a data model to determine whether your level of risk is worth the company taking on.  This also helps them to determine how much coverage you would qualify for and how much your premiums should be.

Underwriters are critical to the application process, and thus it is important for us to understand how the underwriting process works.  Based off of this information, we can already see that it is much better to apply for life insurance when you are younger, healthier, and don’t smoke.  Make sure you take all of this information into account when considering life insurance policies.

Oh, and remember: underwriting isn’t a style of creative writing.

Blog written by: Andrew Jordan, Creative Marketing Specialist II for Sentinel Security Life Insurance Co.