What factors are considered in individual life insurance underwriting?

Life insurance companies each have their own extensive policy and procedure manuals they are supposed to follow in determining whether or not to issue an Individual Life insurance policy, and in pricing that policy. The insurer’s underwriters typically use a combination of factors that experience shows equates with the risk of death (and premature death).

They include the applicant’s answers to a series of questions such as:

(1) age,

(2) sex (except in several states that require “uni-sex” rates, even though actuarial data shows women live longer than men),

(3) height and weight,

(4) health history (and often family health history — parents and siblings),

(5) the purpose of the insurance (such as for estate planning, or business or for family protection),

(6) marital status and number of children,

(7) the amount of insurance the applicant already has, and any additional insurance s/he proposes to buy (as people with far more life insurance than they need tend to be poor insurance risks),

(8) occupation (some are hazardous, and increase the risk of death),

(9) income (to help determine suitability),

(10) smoking or tobacco use (this is an important factor, as smokers have shorter lives),

(11) alcohol (excessive drinking seriously hurts life expectancy),

(12) certain hobbies (such as race car driving, hang-gliding, piloting non-commercial aircraft), and

(13) foreign travel (certain foreign travel is risky).