What is Medical Underwriting?
Medical underwriting is a key component of the application process for most life insurance policies. It allows the insurance company to evaluate the health of the applicant to determine their risk level in offering a policy to that individual.
Why health matters in life insurance
When life insurance companies issue policies, they need a way to keep themselves solvent. If they were to issue a number of policies to individuals who died shortly after buying coverage, they would be at risk. That’s because they rely on people living a number of years with their policies in place. That way, the policy owner pays premiums to the insurer, helping them to offset the sizeable sum they’ll need to pay to the insured’s beneficiaries when they die.
In other words, the longer you’re likely to live, the lower risk you pose to the insurance provider. Being lower-risk means paying lower premiums. Conversely, if you’re high-risk, you’ll pay more for life insurance, and the insurer may even deny your application.
How do life insurance companies estimate how long you’re likely to live and how much to charge for your policy? In an effort to evaluate the risk level of each individual who applies for life insurance, companies use a process called medical underwriting.
How medical underwriting works
When you apply for life insurance, the insurer starts gathering information about you. Some of it will be self-reported. You’ll probably have to fill out a medical questionnaire, for example.
Although life insurers generally rely on applicants to be forthcoming about their current health and their medical history, life insurance actuaries want to get as much detail as they possibly can during the underwriting process. And that usually means the applicant will need to go in for a medical exam.
The exam is relatively similar to an annual physical, including some bloodwork and a urine test. It gets conducted by a physician the life insurance provider has approved. They’ll be looking for things that indicate your health status, like your blood pressure and cholesterol levels and whether or not you use drugs or tobacco. Depending on your age and health status, the life insurance company may order additional tests, like an electrocardiogram.
The life insurance company then compiles the data they gathered from your questionnaire, the physician’s report (called an attending physician statement [APS]), and other information — like your record in the MIB database — to set the rating for your policy. The lower-risk they perceive you to be, the more preferential the rating you’ll receive. A better rating means a more affordable life insurance policy.
The medical underwriting process usually takes somewhere between three and six weeks.
If medical underwriting turns up too many risk factors or a risk factor that’s too significant, the life insurance company may deny your application for a policy. In that case, you’ll need to explore life insurance without medical underwriting.
Medical underwriting-free life insurance
If you can’t pass the medical underwriting process or you don’t have the time or desire to go through the weeks-long undertaking, you can explore life insurance that doesn’t include medical underwriting. Your options here are:
​​​​Accelerated life insurance
Instant issue life insurance
That said, the majority of life insurance policies come with medical underwriting. It’s a process for which you should be prepared before you apply for a policy.