What Is Underwriting? Definition

Why it matters

Underwriting ranges from a few questions to a full medical review. Simplified and guaranteed issue plans use fewer questions, so coverage may cost more or pay less early on. Fully underwritten policies can offer lower rates for healthy people. Honest answers matter, because the carrier uses them to set the price and to review any claim.

Source: law.cornell.edu

Where we use this term

Related terms

Underwriter: An underwriter is the carrier professional or automated system that evaluates an application and decides whether to accept it, rate it, postpone it, or decline it.
Underwriting Class: An underwriting class is the group a carrier places an applicant in after review, such as preferred or standard. Each class has its own premium rate, with healthier groups paying less.
Health Questions (Knock-Out Questions): Health questions are the application questions a carrier asks about medical history. Knock-out questions are the ones where a yes answer makes the applicant ineligible for that plan.
Fully Underwritten Life Insurance: Fully underwritten life insurance is coverage approved after a detailed review of the applicant's health, history, and records. It may include a medical exam, lab tests, and an attending physician statement.
Simplified Issue Life Insurance: Simplified issue life insurance is coverage approved using a short health questionnaire and database checks, with no medical exam. A few health answers can lead to a decline, so approval is not guaranteed.

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Where we use this term

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