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What is underwriting?
Underwriting is the process an insurance company uses when it selects applicants it is willing to insure and determines the cost of providing coverage.
There are common factors that insurance companies may use to decide how much to charge you for the kind and amount of coverage you want to buy, such as:
your age,
your gender,
your health and health habits (smoking for example),
your family health history, whether you are engaged in a hazardous occupation, or dangerous hobbies (auto racing or sky diving for example).
The insurance company receives this information from your application, and may ask you to fill out a health questionnaire or have a health examination or certain medical tests. In addition, the company may request that you consent to the preparation of an investigative consumer report or a Medical Information Bureau (MIB) report.
It should be noted that there are varying levels of underwriting including full underwriting, simplified underwriting and guaranteed issue. Each type of underwriting impacts the premium rates to be charged. Ask your agent or the company which type of underwriting is applicable to the policy you are interested in purchasing and what type of medical information, if any, needs to be provided.
Often group life insurance is subject to different types of underwriting. In some cases, employees actively at work do not need to provide any medical information if they enroll within a specified period of time.
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