When you apply for a life insurance policy, your application will go through underwriting. There are underwriting differences between types of policies and insurance carriers. Let's look at how underwriting life insurance over age 50 works and how this may help you decide what type of coverage to get.
Fully Underwritten Life Insurance
Because the insurance carrier has the most information about you, these prices are usually the least expensive policies available. These can be term, universal or whole life policies. The face amount of the policy can be any amount that the carrier allows.
When a policy is fully underwritten, it means you will take a paramedic exam and the insurance company may request to see your doctor records. For the exam, someone will come to your home or work, or you can go to their office. They will take your height, weight, and blood pressure. They will take a complete medical history. They may do an EKG. You may have to complete a senior supplement (more explanation later). There is no cost to you, and most importantly there is no disrobing!
Every company has slight differences in their underwriting guidelines. For example, some carriers are more lenient with their weight guidelines than others. Some carriers are not as strict about your sugar level for diabetics. And so on and so on.
It's going to sound like there are so many things the insurance company looks at that you will never be able to get coverage. Not true. It sounds like a lot, but it's not really. Most of our applications are approved the first time around, but if for some reason you aren't, we will have other options for you. (And since we will already have your exam done and perhaps records received, it would be a very quick application process the second time around!)
- Build- height and weight. Some carriers use your BMI. Others just have a chart showing agents the minimum and maximum weights per height. Some have different charts for men and women. Some only show maximums. Many carriers have more lenient build charts at 60 or older. But, obviously, the better your weight for your height, the better underwriting rating you can get.
- Blood pressure- Most carriers show their agents the maximum blood pressure levels per underwriting class. Most carriers have more lenient maximums for life insurance applicants age 60 and over. Your blood pressure will be taken three times and the scores will be averaged.
- EKG- Depending on your age and the amount of insurance you are applying for, you may have an EKG done.
- Blood Testing and Urine- Many people ask if they can use the testing at the doctor's office. The answer is no. All insurance companies want to do their own tests. They will do many of the same tests your doctor orders, but they will do additional testing. Some of these additional tests are for nicotine, drugs, alcohol abuse, liver and kidney function tests.
- Nicotine-Tell your agent the truth about your nicotine usage. It will show up in your blood test! Some carriers will give you non-smoking rates depending on your usage, but it must be admitted on your application and exam. Talk to your agent so that they can tell you which company will treat you as a non-smoker as the prices are much better. For cigarettes, you can smoke up to 2 per month and get non-smoker rates with one carrier only. Cigars differ from one carrier to another as does chewing tobacco. E-cigarettes are treated the same as cigarettes. Nicotine patches and gum count. Talk to your agent so you can get the best rating.
- Diabetes-We are discussing Type II diabetes here. Your age at onset is the first thing that's important. Then the insurance company will test to see how well your diabetes is controlled. They want to see your A1c score which measures your average sugar levels over the last three months. It is an important indicator of your control. Another factor is how you are treated, diet and exercise alone, pills, or insulin? Tell your agent as some companies are more lenient with diabetics than others.
- Cancer- Every type of cancer has it's own underwriting guidelines and there are too many to mention here. That said they type and stage of the cancer is important. How long ago the cancer occurred and has it stayed in remission are important. Some skin cancers can get the best ratings, others perhaps not. Again, your agent is your best resource to help you understand how this will affect your ability to get insurance. (Final expense policies may offer a good option here.)
- Family History- The insurance carrier will ask if your parents or siblings were diagnosed with or died from coronary artery disease, cerebrovascular disease, diabetes or cancer before age 60 or 70. Some carriers will lower your rating only for a death, others will just for the diagnosis. Some will only consider your parents, some will consider both parents and siblings. Some carriers don't consider this metric once the applicant is over age 70.
- Cognitive Testing- If you are older, carrier will require you to have some simple cognitive testing. You will have to draw a clock face and show a time like 10 minutes to 11. They will ask the date, where you live, who is president and other simple requests. They want to make sure your memory still works.
- Doctor Records- If you are 60 or over, the insurance carrier is going to want to see that you have regular doctor visits. If you haven't been to the doctor in the last two years, you probably will have a problem applying for fully underwritten coverage. The insurance company will usually request the last five years of records. Doctor records are what usually slows down the underwriting process. It can take up to three or four weeks to get records. We do our best to get them sooner, but it doesn't always happen, especially if your doctor is at the Veteran's Administration or a large HMO like Kaiser Permanente.
- Questionnaires- The underwriter may request more information from you, depending on their findings. There are questionnaires for many issues including hazardous sports, aviation, alcohol and drug use, and foreign citizenship and/or travel. An underwriter can ask you about anything.
- Driving Record- The insurance company will order your driving record. They want to see if you have any tickets for drunk driving or excessive speeding tickets or other moving violations. They want to see if your license has been suspended or revoked.
- Rx Database- Life insurance underwriting requires that they check your prescriptions to make sure you told them everything. They will confirm that the database matches your answers.
- MIB- The Medical Information Bureau has a record on you if you have ever applied for insurance. Insurers will report to the MIB if you have any health issues, driving issues, hazardous sports. This allows companies to confirm your application answers and make sure you don't omit something. You can get your MIB report and review it and if necessary, dispute an entry. All MIB entries are coded, so only member insurance companies can understand them and there is little to no chance of anyone getting your info.
- Questions- The underwriter can you for more detail on any part of your application or the information they get on their database searches.
For a fully underwritten policy, it can easily take four to six weeks from application time to approval if your medical records are ordered. These policies will generally be the least expensive options for coverage because the insurance carrier has the most information on which to base their decision.
Accelerated Underwriting Programs
These are programs where you may be able to get a policy without an exam or blood and urine. Numerous carriers offer accelerated underwriting. Some offer it for term policies only, some for permanent policies, some for both.
The age range is typically 18-50 or 60 years old. You will have to answer health questions on your application. If all works out, you can be approved in about a week. If you don't qualify for this program, you can still apply for a fully underwritten policy.
Simplified Underwriting Products
Coverage with simplified underwriting are called final expense policies. These policies, like accelerated underwriting policies do not require an exam or blood and urine testing.
The big difference is that these policies have a face amount between $2,000 and up to $50,000 of coverage. If you want more coverage, you would need to apply through multiple carriers. Many of these policies only cover applicants from age 45 to 85. There are one or two carriers who go up to age 90 in certain states.
Most of the health questions relate to the last two years, although some are for a longer time. Your answers will determine what level of coverage you can purchase. Most insurance carriers will check the MIB and a prescription database. Some carriers require an interview where you will answer the questions on a recorded phone line and often you will be told if you are approved at that time.
There are different levels of final expense life insurance policies. The best is a level benefit. This means your insurance begins on the first day once your policy is put in force.
If you only qualify for a graded benefit, then the death benefit phases in as follows. Some companies will return premium paid plus interest for the first two years, with full coverage after that. Some do this with a three year exclusion. Some phase your death benefit percentage over three years with increasing returns each year.
You may find that even if you can't qualify for fully underwritten coverage, you can get a final expense policy. These policies are all permanent policies. They are whole life coverage. The cost will be a little more than a fully underwritten policy, but as you now understand, the insurance carrier has a lot less information to consider.
No Underwriting Policies
Yes there are policies that do not require any underwriting. They are called guaranteed issue life insurance. There are very few companies that write this type of coverage. If you cannot qualify for any of the above discussed policies, then this is the only type of life insurance you will be able to obtain. A guaranteed issue policy will be the most costly type of coverage.
These policies have a two year period where they only return your premium plus interest. After that they would pay the full death benefit. This coverage starts at age 40 or 50 and goes up to age 85. The maximum coverage available is usually $25,000 per company.
Getting a Quote
As you can see, there are many factors that help determine what your final underwriting rating will be. When you try to get a quote on the internet, you can't adjust for many of these issues. However, an independent life insurance agent should have a quote engine that take these items into consideration so your quote is more accurate. (We have one!). Also an agent will be able to search many more carriers than you can find on the internet yourself.
As you can see life insurance underwriting takes many different things into account. One of the things we do is to send you instructions for your exam (and cognitive testing if needed) so that you can get the best results possible. If there's a problem, we communicate with you and the insurance company to present your issues in the best way possible. We walk you through underwriting and all steps of getting your life insurance coverage to make the process painless.