What is the Role of an Underwriter in the Life Insurance Business
Life insurance provides money or a death benefit to a beneficiary named by the insured when the insured dies. Underwriters are the professionals who make decisions about when to grant life insurance coverage to a person who applies for a policy.
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Function
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The primary function of a life insurance underwriter is to limit the insurance company's exposure to excessive risk. While insurance companies expect to pay the death benefits provided by life insurance, companies cannot afford to grant insurance to a large number of individuals who may die before making a substantial amount of premium payments.
Process
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Life insurance underwriters analyze information about applicants such as age, employment and medical history. When the analysis is complete, the underwriter receives a computer-generated score that rates the risk of insuring the applicant.
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Effects
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The life insurance company establishes guidelines for what scores are acceptable for granting coverage, and using this criteria, the underwriter determines whether the applicant is insurable. In some companies, underwriters have the power to make exceptions to the scoring system but are held responsible if a loss occurs from a policyholder who received an override.
Features
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Life insurance underwriters communicate the progress and the outcome of their work to the insurance agents who submit policies. In some cases, underwriters request additional information from the agents, order medical records from applicants' physicians or schedule physical examinations for the applicants.
Education
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Life insurance underwriters typically hold a minimum of a bachelor's degree, reports the U.S. Bureau of Labor Statistics. The most common fields of study for future underwriters are business administration or finance, but employers often consider underwriters from other fields, particularly if they have experience in the insurance industry, either in sales or claims.
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