#4.4: The insurance underwriting process

by mingyuan3 min read28th Jan 2021No comments

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CryonicsPractical
Personal Blog

This is post 8 of 10 in my cryonics signup guide, and the last of five posts on life insurance. Underwriting is not a complex or interesting topic, but I'm including this brief writeup in the sequence for the sake of giving readers a complete picture of the life insurance process from start to finish.

What is underwriting?

In the world of life insurance, 'underwriting' basically just means 'approval'. The life insurance company needs to check your health to make sure that it's charging you the right amount. 

To this end, they want to know your family health history, your own medical history, and any hazards you're regularly exposed to (e.g. smoking tobacco, extreme sports, workplace hazards). They may also want to know your income in order to determine whether you're able to afford the premiums.

Older and unhealthier people are at higher risk of dying soon, which means the insurance company will probably need to pay out their death benefit sooner. So assuming (as a toy model) that the company wants to extract the same amount of money from every client over the course of the client's lifetime, they will need to charge more money per month to old and unhealthy people due to the compressed timeline.

What to expect

If you're young and have no health problems, the underwriting process should be quick and easy – just a phone call and a few weeks of waiting. If not, they'll look at your medical records and possibly examine you in person, and there will be a couple additional weeks of waiting tacked on.

The process

Submitting an application

You'll have a face-to-face meeting or video call with your insurance agent where they send you some forms and watch you sign them. In order to apply, you'll need:

  • Your social security number
  • Your driver's license number
  • Your bank information
  • The name and SSN for a contingent beneficiary (the person or organization who receives the death benefit if your cryonics provider can't take it for any reason)

Phone interview

Once you've submitted your application, your insurance company (or a third party that the insurance company contracts with, such as ExamOne) should call you within two business days to conduct the phone interview. The call will take about 30 minutes. They will ask you about:

  • Your past and current medical history
    • Names, addresses, and phone numbers of physicians and hospitals from which you have received medical care within the last 10 years
    • Names and dosages of prescription medications you are currently taking and for what purpose
  • Your family medical history
  • Your employment status, income, and net worth
  • Lifestyle factors such as tobacco use, driving record, foreign travel, and recreational activities
  • Existing amounts of life insurance in force or applications pending with other companies

Importantly, you should not volunteer any extra information beyond what is needed to answer their specific questions honestly. For example, when they say, "Anything else?", you should not say "Well, sometimes I feel really tired and I don't know why" or "There's a mole on my hand that I'm kinda worried about" or "I get sad sometimes but I've never been to a doctor to get tested for depression." If you haven't been diagnosed with or treated for a thing, they don't need to know about it.

If you seem healthy to them, great, now all you have to do is wait. If they find any reason for concern, they will dig deeper, which brings us to:

Releasing your medical records

The underwriting agency may ask for your medical records, including all test results, prescriptions, and diagnoses. In my case, they wanted to look at the last five years. This is a pretty hands-off process on your part; all I had to do was sign a release form with my doctor's office.

Medical exam

How does it work?

People over the age of ~40, and anyone whose health they decide to scrutinize, will be subject to a pretty standard medical exam. You can either go into an office for this exam or have an examiner come to you at home. They say you'll need a photo ID and current health insurance cards, but my examiner didn't ask me for any health insurance info. 

I had someone come to my home and conduct the exam outdoors for COVID safety. The whole thing took about 45 minutes but it would probably take less long than that on a less muddy and windy day.

What will they measure?

The examiner will measure your height and weight, take your pulse, measure your blood pressure, and take samples of blood and urine. In some circumstances, there may also be an EKG component. For your blood, they claim to only be looking at cholesterol levels, blood sugar levels, and kidney and liver function.

In addition to the exam itself, they may also ask you some redundant questions, such as what medications you take, your health history, and how much you exercise. Information you should volunteer:

  • Any history of problems associated with providing a blood sample
  • Whether you're currently menstruating

Waiting

The vast majority of the underwriting process is just waiting. In the best case, where you complete the phone interview promptly and don't need any further scrutiny, you'll wait for about six weeks.

Final steps

After the carrier approves your policy, they'll send it to your life insurance agent, who will walk you through all the details. If you're satisfied, all you need to do is sign the policy and send it to your insurance provider.

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