The phrase “Hurry up and wait” could be applied to the process of buying life insurance. An agent is usually quick to engage in conversation with you to see what you’re looking for, what you need, and if you can pay for it.
Many times, they can instantly get you a proposal or quote, and just as quickly have your application completed and sent into the home office for approval. Sounds simple, right?
Jump ahead to these sections:
- Average Time It Takes to Get Approved for Life Insurance
- What's the Life Insurance Sign Up and Approval Process?
- What Happens During a Life Insurance Policy’s Underwriting Process?
- What Can You Expect In Your Final Underwriting Review and Decision?
- Can You Do Anything to Speed Up the Underwriting Process?
- Is There Anything That Speeds Up or Slows Down the Approval Process?
- Is There a Waiting Period for Your Life Insurance Policy to Start?
Why does approval sometimes happen so quickly, while other times it can seem like an eternity? Below, we look at the process starting from when the agent arrives at your door for your initial meeting until they bring you your approved policy.
Average Time It Takes to Get Approved for Life Insurance
The average time it takes to get approved for a life insurance policy depends upon a number of factors. These can include the following:
- How quickly the agent submits the application to the home office
- How quickly the agent schedules the medical exam (if necessary)
- If the applicant has to reschedule the exam
- How soon the exam gets to the underwriter (the person who approves or declines the application)
- If medical records are required from the applicant’s doctor or specialist
- How long it takes for the doctor’s office to provide those records
- How long it takes for the underwriter to review all of the necessary documents needed to make a decision
As you can see, there are numerous steps involved, with quite a few people being part of the process. So, how long does all of this take? It depends. If a medical exam is required and doctor’s records are needed for an application, it can take anywhere between 48 hours to six weeks or longer.
If the face amount of the policy (death benefit) is under $100,000 and the applicant answers all of the health questions on the applications favorably, some companies can issue a policy of this amount in less than a week.
On the other hand, if the face amount is $1,000,000, it can be longer. Specifically, if the applicant indicates pre-existing medical conditions on the application and a medical exam and/or doctor’s records are required, it can take six weeks or longer.
Some insurance companies are notoriously slow with their underwriting process before they make a decision, and this can be frustrating to all parties involved. That said, you want to be wary of companies that approve almost instantly upon receiving your application.
Sometimes these fast-moving companies don’t underwrite the policy until a claim is filed after the insured dies. These companies save a lot of money in up-front costs by not fully underwriting a policy. Unfortunately, this can also cause big delays in getting a claim paid while they’re doing the underwriting after the claim is filed.
It’s important to ask upfront at what point the insurance company does their underwriting. Some companies that do it later have been known to be among the most difficult to work with when trying to get your money.
What’s the Life Insurance Sign Up and Approval Process?
If you can’t tell already, buying life insurance can get complicated at times. A lot of money is involved. Highly rated and reputable companies won’t rush the process, but they won’t dawdle either. After all, time is money as far as everyone is concerned.
Step 1: Select your company
Like you do with every major purchase you make, it’s always good to shop around and pick the company you have the most confidence in. As life insurance is not something you buy very often and not the hottest topic to talk about with friends and family, you may feel like you’re all alone when you begin the process.
You can ask for a referral from people you know, and if they’ve purchased life insurance, they’ll probably be happy to recommend the company they bought from to you. This is a good starting point, but you still have to do your homework on the company once you get the name.
The best way to do this is by checking the company’s ratings with the three major rating sources:
- A.M. Best & Company
- Standard and Poor’s
These ratings will tell you about the financial stability of the company and its claims-paying ability.
Compare different companies and their ratings before you investigate what they have to offer. There’s no reason not to talk with two or three and do some comparison shopping.
Step 2: Meet with an agent
This may be the most dreaded step in the life insurance buying process. Some people liken it to buying a car or having a root canal performed. It’s not fun, but it’s necessary.
Remember to relax, as a professional agent will be courteous, knowledgeable, and avoid using high-pressure tactics to get you to buy on the spot.
The right agent(s) will conduct a thorough fact-finding session with you. They should take the time to get to know you and what your personal needs are before they ever make a recommendation of what you need.
Consider staying away from doing business with an agent that tells you what you need instead of discovering what you need. A good agent can help you with finding the best life insurance policy and determining how much life insurance you may need.
If all goes well and you’re ready to move forward, you may end up filling out an application. In addition to all of the usual information (name, address, phone number), you’ll be asked a series of questions about your health history. It’s important that you answer these questions accurately and truthfully since any misrepresentations can result in your claim being denied down the road.
Step 3: The medical exam (if needed)
Depending upon your answers to the medical questions in the application and the face amount of the policy, you may be required to have someone give you a medical examination if you want to be issued a policy. Don’t fear, however - it’s not invasive and is relatively painless.
The exam is pretty straightforward. An individual trained in giving these exams will come to your home or office and do the following:
- Ask you many more detailed questions about your health history
- Check your blood pressure and pulse rate
- Check your height and weight
- Collect a blood and urine sample
It’s not a lot of fun, but it takes less than an hour and it can be good for you to know what your vitals are and get some lab work done for free.
Step 4: Underwriting
Once all of the preliminary work has been done in steps one through three, all of your information will go to a person called an “underwriter.” The underwriter’s job is simple; they make sure—based on the information provided—that you are an acceptable risk to the insurance company and that there’s a very good chance that their company will profit from doing business with you.
An experienced underwriter can look at your data and accurately determine if the company should take you on as a risk and issue you a policy. Sometimes they’ll issue you a policy at their standard rates because of your good health, or they may charge you a higher rate because of something in your health history that makes you a higher risk for them.
Unfortunately, you’ll be declined for coverage if the underwriter decides it’s not in the best interests of the insurance company to approve your application.
Step 5: Policy delivery
Last, but not least, your agent will deliver your policy to you. They should take the time to explain all of the policy provisions with you and let you know how you can receive any service as a policyholder if you should ever need it.
What Happens During a Life Insurance Policy’s Underwriting Process?
After your application for a life insurance policy is received by the insurer, it goes through a process called underwriting. An employee called an “underwriter” will evaluate your application, decide on your risk level and insurability, and determine your premium (if your application is accepted).
The underwriting process typically takes four to six weeks, depending on various factors including the face amount of the policy and your medical history. Each insurer has its own underwriting guidelines, but most underwriters follow these steps:
First, the MIB is a trade group that just about all life insurance companies belong to. Companies pay a fee to access information about applicants that other insurers have shared.
MIB reports let underwriters view details about your medical records from previous life insurance applications you’ve submitted in the past three to five years.
Application quality check
Next, your application will be reviewed to make sure all of the correct information is there. An incomplete application will slow down the underwriting process.
The quality check may include a phone interview between you and an insurance company employee, who will confirm the information contained in your application. This phone call usually lasts less than thirty minutes and covers your health history, finances, and hobbies.
This is an exam similar to a checkup with your doctor, and the insurer pays for it. A paramed usually performs the exam at your home or place of employment. In addition to recording your height, weight, and blood pressure, the examiner will collect blood and urine samples to identify potential health concerns and drug use.
Attending physician statement (APS)
If the underwriter has concerns based on information on your application or your medical exam results, they will order an APS.
Waiting for your doctor to get your medical records to the insurance company can delay an underwriting decision, especially if your doctor is slow to respond.
The underwriter will also check any medications prescribed to you over the past three to five years. They will compare the information you provided in the application with this report and your other medical reports.
Motor vehicle report
Did you know your driving record is important when applying for a life insurance policy? It’s true, and this report provides details on your driving history going back as far as seven years.
It provides details on speeding or reckless driving tickets, vehicular crimes, accidents reports, and DUI convictions. In other words, it’s a way to determine additional risk factors.
Underwriters use these tables to assess your risk and estimate the likelihood of death based on your age. Your health profile, including any medical diagnosis, tobacco use, occupation, and family history will determine your placement on the tables.
These tables are used in determining your overall insurability and the cost of your life insurance policy. While not a perfect science, they’re still beneficial.
Finally, life insurance companies are also interested in your financial position. If you have poor credit or are carrying an unusually high amount of debt, the insurer may decline you until your credit score improves or some of your loans are paid off.
Once the underwriting process is complete, the premiums will be confirmed and the policy delivered to you. If there are any issues in the steps above, you might have the option to appeal.
What Can You Expect In Your Final Underwriting Review and Decision?
Once the underwriter has assembled all of the necessary information pertaining to your application (medical records, DMV report, paramedic exam results, etc.), they will thoroughly review everything and make a final decision about your application. There are three possible outcomes:
- Postpone your application
- Deny your application
- Approve your application
Let’s look at each in greater detail so you know what steps to take.
Postpone or delay your application
In some instances, an underwriter will suggest that no formal decision be made on an application and that an underwriting decision should be postponed – it is neither denied nor approved.
The primary reason an underwriter does this is to allow the applicant time to remedy a health situation. For example, let’s say Eric applies for life insurance with XYZ Life Insurance Company. Eric is 5’8” tall and weighs 385 pounds when he submits his application. According to XYZs underwriting guidelines, Eric is morbidly obese, and his application should be denied.
However, the underwriter noticed in Eric’s medical records that he had lost 60 pounds in the eight months preceding the submittal of his application, that his doctor had him on a healthy diet, and that Eric was exercising regularly.
Because of this, the underwriter decided to postpone Eric’s application for six months, giving Eric time to continue losing weight and qualify for a policy under XYZ Life’s underwriting guidelines. This postponement will look much more favorable than being denied coverage on Eric’s MIB report that other life insurance companies will see and could be the reason he is eventually approved for a policy.
Deny your application
Life insurance companies decline to cover applicants in some cases. The primary reasons are usually related to physical and mental health conditions, as well as chronic illness.
Physical conditions that typically cause insurers to deny applications are obesity, high cholesterol, and diabetes. Mental disorders that cause an application to be declined include anxiety, depression, PTSD, bipolar disorder, and schizophrenia.
Similarly, your application for life insurance will probably be denied if you suffer from any of these chronic illnesses:
- Heart disease
- Parkinson’s disease
- Alzheimer’s disease or dementia
Providing a doctor’s statement or medical records attesting to the treatment and stability of your illness may make some companies more comfortable insuring you.
Your application could also be denied due to any of these factors:
- Age: As you get older, you’ll find it more challenging to get approved when you apply for life insurance. The chances are good that you will have experienced some type of illness, making you a higher risk applicant for the insurance company. Underwriters will consider your age when evaluating your application, and it can count against you.
- Alcohol or drug abuse: If your medical exam results show unusually high amounts of alcohol or the presence of illegal drugs in your system, you will probably be denied coverage.
- Hazardous occupation: Life insurance will deny coverage for certain occupations. It will vary by company, but some jobs they consider dangerous include: pilots, fishers, roofers, police, and so on.
Finally, you might be denied coverage because your finances are in poor condition, or you’ve recently been declined for coverage by other life insurance companies.
In most cases, the underwriter will approve your application. Based on your application and all of the other information they’ve reviewed, the underwriter will issue your policy with a preferred rate, standard rate, or charge you a higher premium because they perceive you as a higher risk.
Can You Do Anything to Speed Up the Underwriting Process?
As an applicant for life insurance, you can speed up the underwriting process by being familiar with the process. The more organized you are, the faster your result will be.
One way to do this is to be proactive and help the underwriter obtain any medical records they’ve requested from your doctor(s). Doctor’s offices and their staff are extremely busy, and offices are sometimes understaffed. Responding to insurance companies' requests for medical records tends to end up on the bottom of the “to do” list at many practices.
Your doctor will be much more likely to respond in a timely manner if you call their office and ask them to expedite the release of your medical records. They likely value having you as a patient and will be happy to assist you promptly.
You can also speed up the underwriting process by scheduling your medical exam at your earliest convenience. An exam only takes fifteen to thirty minutes, and the person doing the exam will come to your home or office. If you’re in good health, exam results may be all the underwriter will need, along with your application, to decide on your insurability.
If a phone interview is required as part of your application, be sure to schedule that call promptly, as well. It will only take several minutes for the interviewer to confirm the information you provided on your application and ask for any clarifications.
If you are in a hurry to have a life insurance application approved, consider applying with a life insurance company that offers “accelerated underwriting.” Some insurers use technology that speeds up the underwriting process and eliminates the need for a medical exam and waiting for doctor’s records.
These companies use an online application and proprietary software to decide if they’ll issue you a policy and at what rate. Their rates can be just as competitive as those you’d get if your application had been fully underwritten and you’d had a medical exam.
Accelerated underwriting works best if you’re in very good health. The presence of chronic medical conditions will slow down the application process since the insurer will want to assemble and evaluate information about you, and they may require a medical exam.
Non-medical factors can also extend the application process with accelerated underwriting. These could include risky hobbies you participate in, red flags on your driving record, and travel you have planned to certain countries.
Another way to get life insurance quickly is to buy guaranteed issue life insurance. Companies that issue these policies:
- Ask no medical questions on the application
- Don’t require a medical examination
- Issue a policy to everyone who applies (within certain age ranges)
There are three downsides, however, to guaranteed issue life insurance.
- Costly: The premiums are very high. It’s the most expensive type of life insurance you can buy.
- Limited coverage: Coverage amounts tend to be small, with insurers limiting face amounts to $2,000 to $25,000.
- Graded benefits: Death benefits are “graded,” meaning a full payout of the death benefit won’t be made if you die within the first two or three years after the policy is issued. During that waiting period, your beneficiaries may only receive a refund of the premiums you paid, with a small amount of interest.
Is There Anything That Speeds Up or Slows Down the Approval Process?
Yes, you can impact the speed of the approval process. Two things in particular can determine how quickly you receive an approval: the completion of your medical exam and how soon your doctor can send your medical records to the underwriting department.
Is There a Waiting Period for Your Life Insurance Policy to Start?
After all of that time invested getting approved, it can hopefully go downhill from here. As long as you submitted the right amount of premium (payment) with your application, you’ll be covered as soon as your application has been approved. At that point, the insurance company has an obligation to honor its commitment to you and your family.
Life Insurance Is for the Living
It is good to invest in a life insurance policy, as you can leave money behind that can pay off a mortgage, put a child through college, and let a family maintain their standard of living. Don’t be discouraged by a lengthy approval process – being able to care for your family even after your death is worth the wait.