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What is life insurance underwriting? |
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Life insurance policies are not created equal. The process by which insurance companies determine who is eligible to purchase a policy is called “underwriting” and it is the key to how much you will pay based on the risk category you are placed in by the insurance carrier. The key factors they consider are age, health, family medical history, occupation and your general lifestyle, i.e. tobacco use and hobbies. Applicants who are of the lowest risk (normal weight, non-smokers, good health) are rated as “Preferred” and receive the lowest rate. An example of those who fall into more expensive risk ratings are smokers, those with chronic diseases, obese people, or even those whose immediate relatives died young. Skydivers and small aircraft pilots may be turned down altogether by some insurance companies while other carriers might insure them in at a high risk rate. Because underwriting guidelines vary from company to company it’s best to shop around for the best rates.
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