When a person decides to purchase life insurance, he completes and submits an application to a life insurance company. A life insurance underwriter is a person who works for an insurance company who reviews applications and decides whether or not to cover the applicant. The life insurance underwriter also determines how much the applicant must pay for the coverage and the policy’s exact terms if the applicant is found to be an acceptable risk.
A life insurance policy protects you against the financial consequences of your death. It is an agreement between the policyholder and the insurance company. The owner agrees to pay the insurance company regular premiums, and the insurance company promises to pay a sum of money to the owner’s designated beneficiary in the event of the owner’s death.
If an insurance company consistently pays out more than it receives in premiums, it will go out of business. If premiums are too high, however, the company may lose business to competitors. It is the job of the life insurance underwriter to gather and analyze data about each applicant, determine the potential risk of providing coverage, and set appropriate rates in order for the company to profit.
To help determine an applicant’s level of risk, a life insurance underwriter gathers and analyzes various pieces of information. An underwriter examines medical reports, information about the applicant’s job, and details about participation in dangerous sports or hobbies in addition to the information on the policy application. Actuarial tables, which show statistics about actual losses of certain groups of people over a long period of time, are also used by life insurance underwriters. To ensure that the applicant is financially capable of paying the insurance premiums, underwriters examine the applicant’s credit report and financial statement.
A life insurance underwriter can specialize in writing group policies rather than writing individual policies. A group policy is a single standard contract that covers all members of a specific group on the same terms and for the same price. To determine the conditions of the policy and the amount of the premiums, group underwriters study and analyze data for the group as a whole, rather than on an individual basis.
A life insurance underwriter’s job is complex and demanding, and it necessitates strong analytical skills, meticulous attention to detail, and sound judgment. Underwriters use computers and technology extensively in their work, so strong computer skills are required. Because an underwriter’s work frequently involves dealing with agents, policyholders, applicants, and other professionals, effective communication and interpersonal skills are also required.