A life insurance underwriter reviews applications, determines risk, sets rates, and collects data to ensure the company makes a profit. They analyze medical reports, work information, and financial statements to determine an applicant’s risk level. Underwriters may specialize in group policies and require strong analytical skills, computer skills, and good communication.
When a person decides to purchase life insurance, they fill out an application and submit it to a life insurance company. A life insurance underwriter is a person at the insurance company who reviews the application and determines whether the company should provide coverage for the applicant. If deemed to be an acceptable risk, the life insurance underwriter also determines how much to pay for coverage and specifies the exact terms of the policy.
A life insurance policy provides protection against financial loss caused by death. It is a contract between the policy owner and the insurance company. The homeowner agrees to make regular payments, called premiums, to the insurance company, and the insurance company promises to pay a sum of money to the homeowner’s designated beneficiary upon the homeowner’s death.
The insurance company cannot stay in business if it consistently pays more than it earns in premiums. On the other hand, if premiums are too high, the company may lose business to competitors. The life insurance underwriter’s job is to collect and study data on each applicant, determine the potential risk of providing coverage, and set appropriate rates for the company to make a profit.
A life insurance underwriter collects and analyzes various information to help determine an applicant’s risk level. Along with policy enforcement information, an underwriter studies medical reports, information about the applicant’s work, and details about participation in dangerous sports or hobbies. Life insurance underwriters also consult actuarial tables, which show statistics about the actual losses of certain groups of people over a long period of time. Underwriters study the applicant’s credit report and financial statement to ensure that the applicant is financially able to pay insurance premiums.
Instead of writing individual policies, a life insurance underwriter may choose to specialize in writing group policies. A group policy is a standard contract that guarantees all members of a specified group under the same terms and with the same premium. Group underwriters study and analyze data for the group as a whole, rather than individually, to determine policy terms and premium amounts.
The job of a life insurance underwriter is complex and demanding and requires strong analytical skills, attention to detail and responsible judgment. Underwriters rely heavily on the use of computers and technology in their work, making computer skills essential. Effective communication and good interpersonal skills are also necessary, because an underwriter’s job often involves dealing with agents, policyholders, claimants, and other professionals.
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