What is Underwriting in Life Insurance?

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Underwriting is one of those words that may mean nothing to people outside of the life insurance industry.

It’s time to pull away the curtain and dispel the myths surrounding the subject, and at Quick Quote Protect, that’s exactly what we intend to do in this guide!

What is underwriting? What does an underwriter do?

Insurance underwriting is the process of evaluating the risk in a particular policy. An underwriter looks at all the information available to them and tries to calculate whether the situation is viable for insuring and, if so, how expensive the premiums would need to be to make it work for both the insurance company and the prospective client.

What is the process of underwriting a life insurance policy?

Many people don’t need their policy to be examined by an underwriter. With decades of experience, the set criteria for most life insurance situations is already enough for most. The basic health questions cover key factors - they check boxes regarding your activity, age, location and more, and they can all be used by a computer to find appropriate cover. But sometimes, there’s something unique about a person which just needs a little personal touch to their policy. Enter the underwriter.

How long does the underwriting process take for life insurance?

Underwriting is typically quite a quick process – and often takes little more than a phone call. At Quick Quote Protect, our advisors have the hotline to the underwriter and can quickly give one a call to ask them about any specifics. “I have a client who regularly does hang-gliding,” one might say, “how might this affect her premiums?” – and the underwriter quickly comes back with a decision, that usually goes one of four ways:

• No change – the information doesn’t affect the standard policy terms and it can go ahead as usual.
• A premium increase – the information makes the policy riskier for the insurer and so a change to the premium is offered for full cover.
• An exception – the underwriter is happy to cover for everything else, but not this specific area (hang-gliding in our example). The policy premiums don’t change, but death caused by a hang-gliding incident is not covered.
• Rejection – this information is enough to mean that the insurer is unwilling to cover the client.

Of course, just because one underwriter felt a certain way, doesn’t mean that another will feel the same. At Quick Quote Protect, we will call multiple underwriters if we believe there’s a chance of a better deal elsewhere and get you the policy you need.

In very complicated situations, the underwriter will need time to think about their answer, in which case, they’ll explain this and we can get back to you when they are ready. It’s rare for an underwriter to ask for more than a day or so to confer with colleagues and check over the policy.

What is the importance of underwriting in life insurance?

Insurance underwriting helps keep everything fair. Without it, all policies would be handled on a flat basis, which would generally mean more expensive for everyone! It’s not just life insurance, of course, critical illness cover and income protection are both subject to the expertise of an underwriter and if you have a particularly unusual or unique history and lifestyle, it may require an in-depth underwrite!

The help of friendly and experienced advisors at Quick Quote Protect

While we are not underwriters, we do work with them daily and can often anticipate their responses. Our advisors are experts in all aspects of life insurance, from decreasing term assurance to whole of life cover, and they understand all insurance policy terms so that we can help you get the best deal to fit your lifestyle.

Give us a call to speak to us today or fill in our short contact form and someone will get back to you!