Term Life Insurance Quotes
The thought of applying for and getting approved for life insurance initially seems like a daunting task. But today, this couldn’t be further from the truth. Magnificent technological strides in the life insurance industry
have been made, allowing companies to create quick life insurance quotes specifically tailored to customers in minutes. So then, realistically, how long does the approval process take for Life Insurance?
Easy Article Navigation
- How long does the approval process take for Life Insurance
- What is Underwriting?
- What factors are considered in the underwriting process?
- Guaranteed Issue Life Insurance
- Simplified Issue Life Insurance
- No Medical Exam Life Insurance
- Fully Underwritten Life Insurance
- Factors that can Slow Down the Underwriting Process
- How Underwriters Get Your Information
- How Long Does Approval Take?
How long does the Approval Process take for Life Insurance?
Depending on the type of life insurance policy you are purchasing and other factors, a life insurance application can be completely filled out and approved within 24 hours or could take a few weeks or even months.
What is the process for being approved for life insurance?
Most insurance policies must undergo underwriting to be approved. In this process, rates are determined based on each individual’s assessed risk.
What is underwriting?
Underwriting is the process by which insurance companies assess an individual’s risk to determine premium rates. This is based on statistical analysis of multiple factors.
This being said,
What is the role of an underwriter in an insurance company?
An underwriter’s main role is to ensure that applicants are charged the appropriate premium for the desired level of insurance coverage. Insurance underwriters are responsible for getting the appropriate information from an applicant’s medical records, credit history, driving records, and more and then using this information to determine the risk an applicant poses to an insurance company (i.e., what the chances of them dying before the end of the policy’s term).
How long does the life insurance underwriting process take?
As I stated above, the underwriting process can take as little as 24 hours or as long as a couple of months (or longer, in some cases).
The length of time it takes depends on a lot of factors involving your health and lifestyle profile. Follow along as I dive deeper into the underwriting process, the various types of underwriting, what to expect in the process, and how long the underwriting process can take.
What factors are considered in the underwriting process?
Before an underwriting decision is made, underwriters need to account for all elements that determine your overall risk. If we look back to our underwriter definition, it becomes easy to understand why underwriting is the longest parts of the life insurance application process,.
There are quite a few factors that are taken into consideration during the life insurance underwriting process:
- Health history, family health history, age, gender, height, weight
- The purpose of the insurance policy (estate planning, final expenses, business, or individual life insurance).
- The amount of the death benefit
- If the applicant has life insurance already, how much coverage, or if the applicant plans on buying additional coverage?
- Occupation (more dangerous jobs are higher risk)
- Income
- Smoking habits, alcohol, hobbies, lifestyle
- International travel
Each of these questions regarding your health history and lifestyle helps insurance underwriters determine your overall risk profile to the insurance company. The higher risk you are in their eyes, the higher your premiums will likely be.
For instance, if you work on skyscrapers, cleaning the windows on the outside, 800 feet above the ground each day, you are probably a much higher risk than, say someone who works behind a desk all day.
How long does it take for an underwriter to make an underwriting decision?
Depending on the type of life insurance policy you are looking for, there are a number of different types of underwriting you can go through in the application process. Each one of these types of underwriting takes different amounts of time based on the amount of information that the insurance company needs in order to properly assess your risk and premium.
The main types of underwriting in the life insurance application process are:
Guaranteed Issue
Guaranteed-issue life insurance is offered to any eligible applicant regardless of their health status. It is most often for people in poor health. On average, guaranteed-issue policies are small in face value, often below $25,000.
In this type of underwriting process, there is no medical exam and no health questions, making the process very fast but making the rates equally expensive.
The application process can usually take as little as a few minutes but can take up to a few weeks in some instances.
Simplified Issue
Simplified issue is the next step up from Guaranteed issue. In this type of life insurance underwriting, applicants are asked brief questions regarding their health but are still not required to take a medical examination.
Because this means most people qualify for coverage, as with guaranteed issue, rates are also expected to be fairly high. The reason for this is that without proper knowledge of your health history, insurance companies assume the risk that you could die before your policy is through, leading them to have to pay out your policy’s benefit. As a result, premiums for these types of policies are higher to reflect the higher risk taken on by the insurer.
For simplified issue, the process usually takes less than a week from application to approval, but can take longer depending on the company.
No Medical Exam Life Insurance
In no medical exam underwriting, as the name implies, no medical examination is required. However, there is more information the insurer requires about your health, background, and financial history.
It is common for the insurance agent or company to require you to be submitted for a background check in order to see any negative financial or criminal history. Also, they check your DMV records to see accident history. Lastly, they will usually check prescription databases in order to get an idea of your medication history. With some policies, the underwriter will also request access to your medical records.
The premiums on policies with no exam underwriting are lower than those of simplified and guarantee issue policies, but they might be higher than those with more scrutiny in the application process.
Depending on the company, the third parties involved, and the medium through which you seek approval (online, phone, or in person), this process can be completed in as little as 24-48 hours or can take up to 1-4 weeks.
Fully underwritten
Fully underwriting in the insurance application process takes longer than the accelerated underwriting choices listed above.
This type of underwriting is comprehensive, and is included in whole life and term life insurance policies alike. It takes into account the information on your application, your medical history from your personal physician(s) and combines it with background checks, prescription database information, DMV records, credit history and more.
A fully underwritten life insurance application requires a medical examination, which is usually administered by a nurse. The exam typically consists of blood pressure readings, urine and blood samples, height and weight measurements, and a medical questionnaire.
In some cases, where the face values of policies are very high (usually in excess of $1,000,000) and/or the applicant has reached a higher age group (usually above 60), an EKG can also be part of the medical examination.
If you are healthy and do not need life insurance immediately, it is definitely the ideal type of underwriting for your application process. If you are healthy and willing to take a medical examination and undergo a background, credit, driving record, and prescription check, and you know that all of your information will come back positive, you will undoubtedly receive a lower rate than an applicant who is not in similar health and has a similar background.
As far as time frame goes, it can be difficult to give an estimate for policies that undergo full underwriting. The reason for this is that depending on the health conditions you have, Primary Care Physicians and Underwriters may have to go back and forth a few times until the insurance has all the relevant information needed to make a decision on your premium based on your risk profile. This is usually the longest part of the underwriting process.
If the process goes smoothly, and you are able to secure a medical examination within 3-5 days, the life insurance application process could take as little as 2-3-4 weeks and as much as 6-8 weeks. In some cases, even less with technological advances allowing doctors to send over information almost instantly.
