Life insurance underwriting can be a agonizing experience, because it involves answering the most personal questions regarding our health, hobbies, and habits. Is the process worth the trouble?

The answer is:  It depends! Who does it depend on? YOU!

The question every applicant must answer is: How much do you want to spend on your life insurance? Because the more in-depth the underwriting, the lower your life insurance premiums can be.

If you do a web search, you will find literally hundreds of sites that offer free quotes for "cheap" and "affordable" life insurance.

What isn't so obvious is the underwriting process one must endure to qualify for the advertised rates, or how few people actually qualify for these "teaser" rates.

For example, look at this advertisement below. I've scrubbed out the company name, because the purpose of this article is not to bash any particular company (and almost all of them are guilty of this unethical practice, in my opinion), but to demonstrate how an advertisement that includes "teaser" rates may not tell the whole story, or worse, create a false belief in an unachievable low cost for the average person:

If you look closely at the image above, you will see in the following statement in a very small font: "subject to underwriting requirements."

Even after filling out an online questionnaire, a website may provide you with an inaccurate quote, because until all the underwriting requirements are met, AND consideration has been exchanged (read: you paid a premium upon acceptance of an offer), then there is no insurance inforce.

According to the mortality tables established by the Society of Actuaries, and the underwriting guidelines published by the company that published the advertisement above, only about 5% of applicants would qualify for those low rates. That means 19 out of 20 applicants would pay more.

Again, there's nothing inherently bad about this particular company, because most life insurance companies have preferred rates for the healthiest applicants. That said, somewhere between 60% and 80% of Americans will not qualify for these lower than standard rates. Standard rates are still significantly lower than they were a few just a few years ago.

Life insurance is paid for with money, but it is purchased with your health.

What this means to you is that a free quote is meaningless without a bona fide offer in writing from the insurance company. This only happens after you submit an application and the application goes completely through the underwriting process.

While some companies offer "guaranteed issue" or "simplified issue" life insurance policies, these are not always the policies with the lowest premiums. They aren't necessarily expensive, but they will always cost more than a policy that is fully underwritten.

The Underwriting Process

The lower premiums require what is called "medical underwriting" which generally includes an exam by a para-med (usually a Registered Nurse). The exam will include measurement of your weight and height; measurement of your blood pressure and pulse; blood work to check things such as cholesterol, glucose, protein, and HIV; and a urinalysis to check things such as protein, glucose, creatinine and cocaine.

The insurance company pays for the exam and lab work. Larger face amounts of $1 million or more and/or older applicants (age 60+) may need to visit a medical doctor for an insurance physical in order to qualify for the lowest premiums. Again, the life insurance company will pay for this exam.

The life insurance company will often conduct other investigations to make sure that you qualify for their lowest premiums. These investigations include a check into the Medical Information Bureau database, where a record of every life and health insurance application you have ever made is maintained. The company will also retrieve what is called an Rx Check or Prescription Check where every prescription you have filled in the last few years is maintained in a private database, as well as a Motor Vehicle Records check to verify the answers on your application regarding your driving habits.

At higher face amounts of $1 million or more, an insurance company may request an Inspection Report, which is a financial background check, primarily to verify income and net worth. Bona fide financial statements that are prepared and audited by a CPA may be substituted for the Inspection Report, although at the highest face amounts, both may be required by the insurance company.

One of the disadvantages of an online quoting site is that a website cannot help you prepare for your insurance exam or physical, or help you negotiate or navigate the potential mine field of applying for life insurance. If you make a mistake - a material omission or error - then you can permanently blemish your records for life. The downside of that is that you may never qualify for the lower premiums, or worse, find yourself uninsurable at any cost.

How to Avoid Problems

An independent life insurance agent can help you avoid the pitfalls, and help you qualify for the right policy for your situation.

The purchase of life insurance is a serious decision, with significant financial implications for your family and business. That is why it is always a good idea to use a professional life insurance agent when purchasing life insurance. The best choice is an insurance agent that has earned the professional designation, Chartered Life Underwriter.

For a free initial consultation and a quote on a life insurance policy that best fits your situation, click here, or call today (800) 680-5596.