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What Life Insurance Underwriters Actually Do to Pick Your Rates

Underwriters are the ones who make the final decision to approve your application for life insurance and assign your rate. Your rate is based on their evaluation of the likelihood you will pass away during the term of your policy.

To determine your rate, the underwriter reviews your application and your medical exam results. They evaluate the factors that contribute to your individual risk and place you within a risk category. The more details the underwriters know about you, the better!  It means they can assign your rate more precisely to avoid overpayment. Talking to an agent who will personally help you fill out an application is a good way to make sure you can find the best rates possible for your unique situation.

Most insurance underwriters have a background in business. Drawing on strong math and analytical skills, they put your entire health history together and use industry information —known as life or mortality tables— to estimate how likely you might pass away prematurely.  

The underwriter’s evaluation of your risk of premature death is very significant for applicants choosing a term life policy, because term life pays a death benefit if the insured dies before the end of the term. If the individual outlives the term, the insurance company keeps all of the premiums. If the insured passes away during the term of the policy, the insurance company must out the total value of the policy.

This is why underwriting is so important. If everyone paid too little or too many high-risk individuals are insured, the company could go broke. If they charge too much or are too risk-averse, potential customers will go somewhere else with a lower rate. To get the insurance business right, underwriters have to be sticklers for detail and do the best possible job evaluating every applicant’s individual risk.

Underwriting Factors that Specifically Impact Your Risk

When evaluating your individual risk, underwriters focus on three general categories: your age, your general health, and your lifestyle.


Everyone who signs up for life insurance will be evaluated based on age. While it might feel a little morbid to think of risk in this manner, age is the number one factor that indicates how likely someone might be to pass away.  As you get older, the likelihood of passing away dramatically increases. This is why someone in their early 20s pays a low monthly rate for life insurance while someone in their 70s would pay a much larger monthly premium for a comparable policy.

We can’t escape the fact that we all get older. Our birthday each year reminds us. But life insurance companies don’t think of age the same way we do as marked by our birthday celebrations. Each insurer does things differently, but life insurance companies do not necessarily wait for your birthday to raise your rate. Some carriers will raise your rates 6 months before your actual birthday.


Next, your underwriter reviews your health history including the information on your application and the results of your insurance paid medical exam. This includes a review of your family health history too, not just your own current health status.

Because everyone’s health is so unique, this is not as clear to chart as age, but it certainly plays an important role in the risk equation. Like age, certain health conditions are a good metric in predicting life expectancy, and may lead to either higher rates or a denial of coverage. You do have a level of control over certain aspects of your health included in your rate decision. Type 2 diabetes, high cholesterol, and high blood pressure are all indicators that could increase your rate. But you can treat these conditions with a combination of diet, exercise, and medication, which would lead to lower rates.

Some people are afraid to apply for life insurance because they are afraid of the medical exam. In many cases, applicants get a better rate category than they expected. In reality, the exam is free, quick, and simple. It requires answering some questions, providing a urine and blood sample, and the exam can even be done at your home or office. Typically, this will end up saving you money. If you try to get a no medical exam policy, also called guaranteed issue, you will pay a heck of a lot more than with a standard policy because the underwriter will simply assume that you are not in peak health.


After your age and health, there is one final area of risk underwriters review to price your policy. The insurer asks about a handful of potentially dangerous activities and your profession. Activities that lead to higher rates include skydiving, SCUBA diving, piloting aircraft, bungee jumping, rock climbing, car racing, back-country and heli-skiing and snowboarding, extreme watersports, and other dangerous pastimes.

Although it might be tempting to not mention things that you think won’t help your case, remember that lying on an insurance application is considered fraud and can lead to a canceled policy, fines, and even jail time. Always be honest and thorough when completing any insurance application.

Risk categories

After reviewing your application, the underwriter assigns you to a risk category that corresponds to a monthly premium rate. Most large insurers have three or four categories with names like Preferred Plus, Preferred, Standard Plus, and Standard. They then break out smoker and nonsmoker categories as well, as smokers are susceptible to a range of illnesses. If you don’t qualify for the standard categories, you may still qualify in the subprime category for insurance at a higher rate, which is based on your specific health history and lifestyle.

The better the risk category, the lower the rate. Once the underwriter chooses your rate category, their work is done and they move onto the next application.


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