The role of the life insurance underwriting department
Many people feel very uncomfortable with the amount of personal information they are asked to disclose when making an application for a life term insurance policy. It is almost as though the insurance company they are applying to is compiling a small biography of them which is in fact not too far away from the truth.
It is vital for any insurance company to know each and every client inside out before they make the decision to do business with them. Of course everybody that applies to the insurer is a potential client and they want to do business with as many people as possible which means that each client is required to submit the minimum requirement of the application form which is jam packed full of questions about the lifestyle, health, occupation and recreational activities of the client.
The reason for this is so that they can make a basic assessment of the client and determine whether they can be accepted straight away or whether the life insurance underwriting department needs to investigate the client and their history further. This is not a sporadic thing it happens if the application shows that the client presents anything above the average risk to the insurance company.
The role of the life insurance underwriting department is to find out as much as possible about a client and make sure that the risk they present is not too great that they are pretty much guaranteed to make a claim during the policy, this is bad business for the insurer and these people, the severe minority will be declined.
Those that present a medium to high risk can be accepted however they will have to pay for their higher risk rate by way of an increased premium or limited policy. This may sound unfair but in fact all the life insurance underwriting department are doing is ensuring that on a whole all customers are dealt with fairly. The money that is paid out for claims comes from one pool of money that all customers pay into. The higher risks pay more so that they don’t just bleed the pool dry should they all need to make claims.
