How Do Life Insurance Companies Use The Underwriting Process?
The underwriting process is designed to categorize applicants who seek life insurance policies. After the application and medical information about the applicant is completely gathered from a background check of the applicant, the underwriters make their underwriting decisions in two stages. • First Stage – The underwriters decide whether an applicant qualifies for life insurance at all: For example, if an applicant has had cancer within the past year, he would not likely be able to buy underwritten life insurance at any price • Second Stage – The underwriters classify the risk of the applicant to determine the price of the coverage: Most applicants receive either a “preferred” classification (intended for those who are below average risks) or a “standard” classification.
