Underwriting a life insurance policy is a process that’s done by the insurance company to determine how much of a risk you pose to the insurer. Your overall health, age, occupation, and hobbies are all factors that are examined during the underwriting process. The best life insurance companies in NYC guide you through the process of getting a life insurance policy for yourself or your employees to help you understand what’s involved. In the meantime, read on to learn more about what goes into underwriting a life insurance policy.
The Factors Used in Underwriting a Life Insurance Policy
An insurance company uses multiple factors to determine the final cost of a life insurance policy. All insurers use different factors and criteria, but the following are standard industry factors that you’ll need to answer during the application process.
Age at the Time of Application
Your age at the time of application strongly affects the price of the premium. Typically, the younger you are, the lower your premium as you’re considered less of a risk to the insurance company due to a lack of health issues. As you age, health issues that can shorten your lifespan are more likely to appear and increase the odds of an untimely death.
Medical History
Your medical past is another factor that plays into the cost of the premium. The insurance company is looking for indicators that you have a chronic illness or suffered an injury that affects your quality of life. Short-term illnesses and injuries usually don’t affect the premium as these issues don’t return once resolved.
Medical Exam for the Insurance Company
The insurance company has you come in for a medical exam to get a picture of your current health status. You undergo a physical exam that checks your vital signs, which includes the collection of blood and urine samples and a check of your height and weight. The exam is provided at no charge to you, and its purpose is to help determine the amount of risk you present to the insurer.
Physical Health
This factor, while related to the medical investigation, is a stand-alone factor in that your current physical condition influences your future condition. Being in a robust state of physical health indicates that you’re more likely to stay in that state for the foreseeable future and shows that you’re actively taking care of yourself.
Profession
Some occupations are inherently more risky than others. For example, someone who works as a lineman for a utility company faces more inherent danger during the workday than someone who works in an office. The higher odds of an early death can result in a higher premium. This is a factor that an employer who’s looking into NYC employee life insurance can expect to influence premiums depending on their industry.
Vices and Hobbies
Applicants who smoke or drink alcohol on more than a casual basis are increasing their risk of health issues, something that influences the premium cost. The same goes for engaging in risky hobbies such as adrenaline-inducing activities. Quieter hobbies and vices that don’t put your health at risk have less of an influence on the premium.
Insurance Classification Categories
After the application is completed and evaluated, you’re assigned a classification rating that indicates your level of insurability. They include:
- Preferred Plus
- Preferred
- Standard Plus
- Standard
- Substandard or table rating
- Tobacco/smoker
Start Your Life Insurance Policy Application Today
At Margolis and Associates in New York City, we serve individuals and businesses who are looking to provide financial protection for their loved ones. Contact us today to learn more about what’s involved in getting a personal or group life insurance policy for yourself or your employees. We’ll go over your options and help you pick an insurer that fits your needs best.