What is insurance pricing?
Underwriting is the process of assessing your level of risk when applying for insurance. The story of risk determines:
the amount of coverage to which you are entitled;
the amount of the monthly premium.
What are underwriters looking at?
Insurance companies use the underwriting process for several types of insurance.
For life insurance, the underwriter assesses the risk of premature death.
For health insurance, it assesses the risk of illness or injury.
For mortgage protection insurance, it assesses both the risk of death and the risk of illness or injury.
It assesses several risks for auto and home insurance (fire, theft, fraud, flood, etc.).
How is the process?
- Submission of the request. When you apply for life insurance, your file comes into the hands of the insurance company’s underwriters.
- Treatment. Underwriters review your application using various tools, including an underwriting guide called the Handbook. The latter contains guidelines for assessing the risks based on medical history, driving record, alcohol consumption, etc. A heavy drinker, for example, will be considered more at stake than a person who doesn’t drink.
Generally, the higher coverage and the older you are, the more “evidence of insurability” you must provide. By this, we mean elements that demonstrate why you are at low risk. If necessary, you must answer questions and submit them to medical examinations.
Requirements may vary depending on the situation, but underwriters base themselves on the following things:
She is attending physician’s statement. It is a summary of your medical history prepared by your doctor at the request of a third party, which ensures its objectivity and accuracy.
Paramedical examination. An independent Paramedical Examiner collects items from your medical records and checks your height, weight, blood pressure and pulse.
Vital signs. A licensed paramedical company checks your height, weight, blood pressure and pulse.
Telephone interview. This interview collects information about your lifestyle and medical history. This interview, combined with taking vital signs, can replace a paramedical examination in some cases.
Blood test/blood profile. For analysis purposes, you must undergo a blood test and submit a urine sample which will provide information on your state of health.
Questionnaire for people of the third age (QPTA). Insurance companies often ask people 71 and older to answer the QPTA since the risk of health problems increases with age. This questionnaire focuses on activities of daily living and assesses your cognitive abilities and your mobility.
Underwriters sometimes ask for other documents, such as a driving record or a financial investigation report.
- Decision. The pricing process will determine:
if your application for coverage is approved;
how much life insurance you will get;
the amount of the monthly premium.
You can then decide whether to buy the insurance at the price and conditions offered.
How long does the pricing process take?
Your insurance application can be approved in hours or days. But it can also take you several weeks or months. It all depends on several factors, including the type of life insurance policy you want.
How do I get a lower life insurance premium?
Some risk factors do not change, such as age or family history. Others, however, may vary:
A balanced diet and regular exercise provide both financial and physical benefits. Healthy people who lead healthy lifestyles generally pay lower life insurance premiums. Being overweight can increase your risk of certain diseases (diabetes or heart disease). The closer you get to your healthy weight, the lower your premiums.
You can increase your chances of getting a better price by adopting a healthier lifestyle. For example, you could moderate your alcohol intake and quit smoking. Even driving carefully can have an impact.
Is pricing still essential?
