Life Insurance: Underwriting for Women
Welcome to my new series on Life Insurance For Women. In the introduction, I mentioned the reasons why women need insurance and how it empowers you.
I am going to interview Chad Viminitz from GoLife insurance https://golife.ca/fourcolumns on the following ten topics:
- Women are being overcharged, a lot, for mortgage insurance – what you need to know!
- Why women talk themselves out of the life insurance they want/need?
- How to prepare for the baby- 3 pieces to financial protection (will, mat leave savings, life insurance).
- Is underwriting for women different?
In the fourth interview, we focus on how is underwriting for women different. It is important that women need to know about being approved for life insurance.
What is underwriting?
Underwriting is the process of assessing the degree of “risk” relating to the person applying for life insurance. Basically, underwriting answers the question: “Are you expected to have a standard life expectancy?” Underwriting is a process that benefits individuals applying for life insurance because it results in more individuals getting coverage and premiums for life insurance being less. For example, I have a heart condition and because underwriters can get more information about health conditions today, the odds of being approved have increased.
Why is underwriting a good thing?
Underwriting is a positive part of the application process as it has resulted in life insurance becoming more affordable (ie. lower term life insurance premiums) and with more individuals being approved and getting coverage, even if there are health concerns. It can be intimidating to share one’s medical history or vitals and wait to be “assessed” but it is an important part of the application process that does not need to be feared. Having underwriting completed upfront, at the start of the application process also gives you confidence that your coverage is actually in place. Creditor insurance (ie. mortgage insurance) for example completes their underwriting post-claim – meaning after the person is dead – at the wrong time. Underwriting that is done at the beginning results in the best life insurance coverage.
Is it harder for women to get approved for life insurance?
There is no difference between the underwriting requirement for a woman or a man. Of course, men and women may have different medical issues but life insurance pricing reflects the different risks. Women typically pay less for life insurance because they have better mortality rates, ie. they live longer.
What if I have a health issue? Can I still get life insurance?
Yes! Don’t let a medical issue stop you from applying for life insurance, the worst they can say is “no”. I have a heart condition and applied 3 or 4 times before I was eventually approved. Over time underwriting may take a different view on a certain health issue, especially as technology, drugs and treatments evolve. An example is individuals who are HIV-positive can now get life insurance, that wasn’t always the case. Life insurance companies are in the business of getting people coverage, know people and expect that medical treatments and conditions are part of a normal life, they just want to know the details before approving the policy.
Can women get coverage while they are pregnant?
Yes, even though the body is going through a significant change – you can apply for life insurance while pregnant. Pregnancy can have complications that can impact one’s application, blood pressure, and gestational diabetes being two examples. If possible, it’s recommended to apply while in your first or second trimester. Getting coverage before baby arrives provides confidence that your family is protected from day one of becoming a mom.
What is involved in getting approved?
Most life insurance applications need a combination of three elements:
- Tele-interview – answering your questions about your medical history
- Nurses’ visit – blood and urine samples are usually required for applications over $500,00 of coverage
- Doctor’s report – These reports are sometimes requested to clarify or gain a better understanding of one’s medical information. It is not an indication of being declined or paying higher premiums. Greater clarity an underwriter has about an applicant’s medical condition, the better chance for an application to be approved.
The requirements specific to you will depend on your age and the amount of life insurance coverage you are applying for, ie. More coverage, more requirements.
What about No-Medical life insurance products?
Yes, there are life insurance products that are guarantee your approval. These policies come with limitations, restrictions and higher costs. Non-medical policies often cost 30-40% more, limit coverage between $25,000 to $350,000 and sometimes don’t pay a claim in the first couple of years. If you are considering a non-medical life insurance policy you should read the details of the policy. Answering a few questions and seeing a nurse will save you money and provide you with appropriate protection and good life insurance coverage.
What are the most common reasons people are declined for coverage?
It’s important to note that it is a small percentage of applications that are fully rejected. It does happen that an underwriter has to make the decision to decline an application. Some of the most common reasons are:
- Non-disclosure – the individual lied or was hiding information
- Ongoing medical investigation – the individual is scheduled for more tests or procedure
- Time frame – for example, a person may have had a heart attack, drug use or cancer but not enough time has elapsed from the date of the last episode
- Dangerous Driving and license suspension
- Illegal drug use
Being declined does not mean you cannot get coverage later if the reason for being declined changes or treatment improves – apply again!
Are insurance companies trying to charge the highest premium?
Not at all. Insurance companies are competing for clients and term life insurance premiums are at historic lows. Women should feel more confident applying for a personal life insurance policy compared to creditor insurance or mortgage insurance at the bank. Women are often charged 50% more for mortgage insurance at the bank. Women who apply for a personal policy usually qualify for “Preferred Underwriting”. Preferred underwriting means you may qualify for a 10% or 20% discount if you meet specific underwriting criteria, resulting in getting the best term life insurance rates possible.
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