Insurance
What is Underwriting?
Definition
Underwriting is the insurer's process of evaluating an applicant's risk to decide whether to issue coverage and at what price. It considers age, health, driving record, credit-based insurance score, property condition and other actuarial factors.
Real-World Example
A 45-year-old applying for a $1M term policy completes a paramedical exam, blood work and MIB (Medical Information Bureau) check. Six weeks later, the underwriter classifies him as Preferred Plus at $58 a month.
Why It Matters
Underwriting classifications drive lifetime premium costs. A Standard classification versus Preferred Plus can add tens of thousands of dollars over a 30-year term.
Frequently Asked Questions
How long does underwriting take?
Traditional underwriting: 2–8 weeks. Accelerated underwriting for eligible applicants: 24–72 hours.