What is insurance underwriting?

When you apply for a life insurance policy, you’re asked to share a lot of personal details about your health, your habits, and even your job. Insurers use that information to evaluate the risk of insuring you and to determine how much you’ll pay, a process called underwriting.

The process of life insurance underwriting can be quick or take weeks, depending on your situation and the type of coverage you apply for. The details vary, but the goal is always the same: to set a price for the risk they take by insuring your life.

What is insurance underwriting?

Underwriting is the process insurance companies use to assess the risk of insuring customers and to set premiums accordingly. If a policyholder dies prematurely, the insurer may pay out more than it has collected in premiums. By evaluating risk carefully and setting appropriate rates, insurers expect most policies to generate more in premiums than they pay out, allowing the broader pool to absorb premature losses and keep the business sustainable.

Applicants who present a higher risk because of health conditions, habits, or other factors may face higher premiums or be denied coverage altogether. Some life insurance policies have less stringent underwriting requirements, especially for lower coverage amounts or younger, healthier applicants.

For example, term life insurance, which provides coverage for a set number of years, is typically easier to qualify for. You might find a $500,000 term policy that doesn’t require a medical exam, especially if you’re young and healthy. In some cases, the underwriting for this kind of policy can be completed almost immediately.

Permanent life insurance, on the other hand, offers lifelong coverage and typically requires a more thorough review. A $150,000 universal life policy—a type of permanent insurance—might involve a medical exam and take several weeks to underwrite, especially if your application includes any health concerns.

Another option, guaranteed issue life insurance, doesn’t require any underwriting at all. These policies are usually limited to lower coverage amounts and tend to cost more for each dollar of coverage.

Key factors that influence your premium

Insurers consider a range of personal, health, and behavioral factors when reviewing your application.

• Age: The older you are, the more you can expect to pay in premiums. Younger applicants typically receive lower rates for the same coverage.
• Build and weight: Your height and weight are evaluated together. If your build falls outside an insurer’s preferred range, your premium may increase.
• Driving record: A history of traffic violations or accidents may increase your perceived risk, depending on the insurer’s policies.
• Family medical history: A family history of certain hereditary conditions, such as cancer or heart disease, can raise your premium.
• Gender: Because women tend to live longer than men, men are often quoted higher rates for similar coverage.
• Health: Chronic conditions or certain medications may affect your premium, but being approved is still possible if those issues are well managed.
• Hobbies: High-risk activities—such as scuba diving, skydiving, or auto racing—can increase your premiums.
• Occupation: Jobs with higher physical risk, such as aviation, construction, or law enforcement, may lead to higher premiums.
• Policy details: Permanent policies and those with higher face values generally come with higher premiums than shorter-term, lower-value policies.
• Residence and travel: Living in or frequently visiting areas with greater health or safety risks may influence underwriting decisions.
• Smoking: Smokers typically pay more than nonsmokers. If you’ve quit, your premium depends on how long you’ve been smoke-free.

Life insurance underwriting ratings explained

After reviewing factors that influence your premium, an underwriter assigns you a rating based on the level of financial risk you pose to the company. Life insurance companies typically use five rating categories:

• Preferred plus is the lowest risk category. Applicants in this group are in excellent health, physically active, and have no red flags in their family medical history.
• Preferred means your health is very good overall. Any conditions are minor and well managed. 
• Standard plus is slightly below the top tiers. You may have some manageable health issues or a family history of common conditions like heart disease, but no major concerns.
• Standard applicants may have a more complicated health profile or a family history of serious conditions such as cancer.
• Table rating is sometimes referred to as a “rated” policy. This designation applies to higher-risk applicants. It may reflect chronic health issues, certain medications, or other risk factors. Table-rated policies often come with significantly higher premiums.

Some insurers and policies might also have a separate tobacco rating. You might be classified as a smoker if you’ve used tobacco in the past 12 months, or considered a nonsmoker only if you’ve abstained for at least three years.

Steps in the life insurance underwriting process

The underwriting process can vary by insurer and policy, but most follow a similar set of steps to assess your application and determine your final premium.

1. Application review

The underwriter starts by reviewing your application for potential concerns, such as high-risk travel, dangerous hobbies, substance use, a poor driving record, or health factors like obesity. If something needs further investigation, it can slow down the process and delay your final rate.

2. Health or medical exam

Some policies, especially term life policies under $500,000 for younger applicants, don’t require a medical exam. Others (typically permanent policies) may involve basic tests, like blood pressure and lab work, or more extensive evaluations. In some cases, the insurer may request records or statements from your doctor.

3. Other investigations

Underwriting may also involve checking your credit, reviewing your driving history, and confirming that the coverage amount is appropriate based on your income and financial obligations. These checks vary by insurer and state law.

4. Final underwriting assessment and rating

Once all the information has been reviewed, the underwriter assigns you a rating. You might be approved at the rate you were quoted, offered a policy at a higher premium, or asked to reduce the coverage amount. In some cases, the insurer may decline to offer coverage at all. If you don’t accept the revised terms, the policy won’t be issued.

The bottom line

Underwriting processes vary by insurer. Some companies focus on lower-risk applicants and may approve term life policies quickly (often without a medical exam) if coverage amounts are modest. These policies typically have face values under $1 million. Most permanent life insurance policies require full underwriting and can take two to six weeks to process. Guaranteed issue policies skip underwriting, but typically come with higher premiums and lower coverage amounts.

If you’re unsure how underwriting might affect your application, insurance comparison sites such as Policygenius and Quotacy offer tools that let you preview how insurers evaluate different health and lifestyle factors. Reviewing those before you apply can help you narrow your options, estimate your premiums, and avoid surprises.

Specific websites are mentioned in this article for educational purposes only and not as an endorsement.