After you submit an application, underwriting begins. Underwriting is the process life insurance companies use to determine whether they are able to offer life insurance coverage to applicants, and the premiums they charge. Factors including an applicant’s age, sex, health, lifestyle, contribute to the life insurance company’s decision.
The carrier will determine your risk level, based on your individual risk factors. Some applicants present more risk, and some present less. Your risk class is used to determine how much it will cost the carrier to insure you. The carrier is “at-risk” with every person they insure because they are contractually obligated to pay a death benefit if the insured dies while coverage is in force. Using their established underwriting guidelines, actuarial science, historical mortality data, and your unique risk factors, the carrier determines the premium rate necessary to issue your policy while maintaining the insurance risk of your policy.
There are a variety of factors considered during underwriting that help carriers determine your level of risk (and can vary by state), including: