Accelerated underwriting is increasingly more popular in the life insurance industry. Three out of every four insurance companies currently use accelerated underwriting and the rest are planning on implementing the “express underwriting” process in the near future.
So, What Does that Mean to You and Why Should You Care?
If you are in good health and have good credit, you may be able to qualify for a fully underwritten, regularly priced term life insurance policy of up to $1 million without a medical exam. This speeds up the process of underwriting significantly saving you time and worry. This is even better if you are squeamish about visiting the doctor and welcome a way to avoid that step.
Not a New Product, Just the Process is Streamlined
Accelerated underwriting allows qualified applicants to purchase a regular term life insurance policy that doesn’t require a paramedic to visit the applicant’s home to collect blood, urine, and vital signs. It also doesn’t require the applicant’s physician to submit a written statement about the applicant’s health history or provide copies of the applicant’s medical records. Eliminating these steps drastically speeds up the approval process.
What it is NOT
The accelerated underwriting process is not the same as guaranteed life insurance. Guaranteed life insurance may be available to you regardless of health, but the premiums are more expensive and the death benefits are limited and require a waiting period.
There is also something called simplified issue life insurance which also has no requirement for a physical exam. But in this case you can expect to pay more than the person who went through full underwriting and a health exam.
Just because the word “accelerated” is use in describing accelerated benefits rider doesn’t mean its not related either. Accelerated benefits riders make it possible to use part of your policy’s death benefit while you’re still alive if you become terminally ill.
What Can You Buy with Accelerated Underwriting?
Policies that offer accelerated underwriting will have a minimum death benefit amount, typically $50,000 or $100,000, as well as a maximum death benefit that is usually no higher than $500,000 or $1 million. In some cases, the maximum policy amount allowed with accelerated underwriting depends on your age.
You can also contract other benefits associated with traditional, fully underwritten term policies, such as level premiums, term-to-perm conversions, continued coverage at higher rates after the policy’s term expires and riders for accelerated benefits or a waiver of premium.
Could This Be for You?
You must be in the age range and seeking a policy amount within the limits the specific insurer dictates. You should have no major medical conditions (such as cancer, diabetes or hypertension) and no biological parent or sibling who died from heart disease or cancer before age 60. Healthy blood pressure and cholesterol levels are also very important.
It is not just about your health either. If you’ve filed bankruptcy in the last five to 10 years, have a history of driving recklessly or under the influence within five years, or have felony charges or convictions you might be disqualified. Even more than two moving violations in the past three years can block you from accelerated underwriting. The requirements vary by insurer which means that working with an independent life insurance specialist like the Ziff Agency keeps the doors open to you for all the options.
Is it Really That Much Faster?
Traditional underwriting can take anywhere from two weeks to 12 weeks. Accelerated underwriting, however, can take less than 24 hours or up to a 48-hour turnaround, depending on the insurance company. So much of the documentation is done online these days. Insurers can obtain the data they need instantaneously from the Medical Information Bureau, credit bureaus, motor vehicle departments, pharmacy databases, and other sources. Approval can even occur as soon as immediately after the phone interview, but not in all cases.
Here’s a Caveat
Pay attention to the rating you can get under this process. By skipping the medical exam of traditional underwriting, you might be leaving savings on the table by testing for one of the better, less expensive insurance risk classes for applicants in good to excellent health. The accelerated underwriting process might give you a preferred or standard rating due to an imperfect credit history, while you could get super preferred with the full underwriting process, due to an excellent bill of health.
What to do?
If you’re in very good to excellent health – and have good credit and a clean driving record – there’s a good chance you’ll be approved. Talk with us and we can tell you more about whether you might qualify and help you find the life insurance policy that offers the best value for your situation.