Underwriting simply means assessing risk. Find out more about what life insurance underwriters look for – and how this can affect your life insurance application and premiums.

Ever wonder how insurance companies review your application – and how they come up with the amount you pay for your premiums? It’s all about assessing risk.

Before an insurance company can accept your application for cover, they need to determine what level of risk you present to the company’s business. This process is called ‘underwriting’ – a word that originated centuries ago at British insurer Lloyd’s of London, when bankers would literally write their name under a risk assessment.

Professional underwriters review the criteria on your application, to see if they can offer you a policy – and if so, how much cover you’re eligible for and how much your premiums will cost.

Here’s what underwriters consider during the underwriting process:

Medical questions and tests

The most important factors that influence whether you’re insurable – and if you are, how much you’ll need to pay – are your age and your health status. Underwriters will assess your health status either through a physical examination, a questionnaire about your health and your medical history, or a combination of both. 

You might be surprised to learn some of the ways your health is evaluated. For example, the use of certain medications for pre-existing conditions may make you a higher risk.

False statements can result in penalties and problems if you need to claim a benefit. That’s why it’s vital to be honest when self-reporting your answers to medical questions.

Other factors used to determine your premiums

Health is the most significant factor in the underwriting process, but some other factors may play a part too – depending on your age and amount of cover you ask for. These may include:

■     Family health history
■     Lifestyle, including adventurous hobbies
■     Prescription history
■     Occupation
■     Whether you smoke