What is Approval?
In life insurance, approval is what happens when the life insurance company has completed underwriting and decided to issue you the life insurance policy for which you applied.
The steps before approval
When you apply for life insurance, the insurer usually doesn’t make a decision overnight. Instead, your application kicks off a process called underwriting.
For most types of life insurance policies, that includes a medical evaluation of the person you’re wanting to insure, whether that’s yourself or another individual. The life insurance company wants to figure out how long the proposed insured is likely to live so they can price the policy accordingly. That generally means completing a medical questionnaire and getting an examination from an insurer-approved healthcare provider.
The insurer then combines the resulting data with other details they gather, like the proposed insured’s occupation and whether or not they smoke. Using algorithms and actuarial tables, they determine if they’re willing to insure that individual and, if so, how much their policy will cost.
Once this underwriting process is complete, the applicant gets notified of their application’s approval or denial.
After approval, you may need to sign some additional paperwork to activate the policy.
What to do if you don’t get approved
If the life insurance company denies your application, there are other channels you can explore. Your best bet may be guaranteed issue life insurance, which is just what it sounds like. When you apply for this type of life insurance policy, your approval is all but guaranteed.
These policies cost more than medically underwritten life insurance, but they’re a good option for people who’ve had prior life insurance applications denied.