Does Life Insurance Underwriting Get Tougher At Higher Amounts?

Occasionally when I am doing an interview to determine what rate class a person will fall into and what company will be best for them, I am asked if they will look less critically at the health issues if they ask for a smaller amount.

This often comes as questions like, “What if I apply for two $250,000 policies with separate companies instead of $500,000 with one company?” The thinking, and it has some logic to it, is that if a company is exposed to less risk maybe they won’t look at the health history or another issue as critically. That could end up with this logic, rather than a large policy approved at a standard rate, two smaller policies might be approved at preferred rates.

Unfortunately for the life insurance shopper underwriting doesn’t work that way. The truth is that while a company may do more tests and more intensive scrutiny of medical records at higher amounts, if a person has elevated liver function, high cholesterol or problematic family history, the company will award the same rate class whether the face amount is $100,000 or $10,000,000. If that weren’t the case then everyone with health issues would be buying multiple small policies rather than the amount they need in one policy.

I mentioned that the underwriting requirements do get more stringent at higher amounts. Here is a standard table of requirements starting with A being children under 18 at lower face amounts to H, I, and J where the requirements are for older ages and high face amounts. Actually they aren’t in exact order as A, B and E are for applicants under age 18. Note that none of them require a full blood draw.

A Non-Medical
B Paramed, Urinalysis, Attending Physician Statement
C Paramed, Urinalysis, Blood Profile
D Paramed, Urinalysis, Blood Profile, EKG
E Paramed, Urinalysis, Attending Physician Statement, Dried Blood Spot
F Paramed, Urinalysis, Attending Physician Statement, Blood Profile, EKG
G Urinalysis, Blood Profile, EKG, Physician Exam
H Urinalysis, Attending Physician Statement, Blood Profile, Physician Exam, Treadmill EKG
I Urinalysis, Blood Profile, Physician Exam, Treadmill EKG
J Urinalysis, Attending Physician Statement, Blood Profile, Physician Exam

Bottom line. While the up front requirements may differ, the results are all measured the same. Again, high blood pressure is high blood pressure whether the applicant wants a modest amount of insurance or tens of millions.