What is Insurance Underwriting and How Does it Work? A Guide

Back in the day, applying for life insurance meant filling out forms and waiting weeks for an answer. Today, technology has changed that. Now, life insurance applications can be approved quickly — sometimes even the same day. In other cases, there may be a short period of review.

But that doesn’t mean your application is stuck in a queue. Behind the scenes, underwriters are reviewing your information to understand your situation and assess risk. From the outside, it can feel mysterious, but the process is careful and methodical, designed to make decisions consistent and pricing fair.

“Underwriting is how we decide whether we can accept someone for insurance and what their premium will be,” says Kristine Fogarty, Chief Underwriting Officer at RBC Insurance. “We’re looking at health, lifestyle, and other factors to make sure coverage is priced fairly and works the way it should.”

This guide breaks down what is underwriting in insurance, how the underwriting process works, and what you can expect at each step.

Key takeaways

• Underwriting is how insurers assess risk. It’s the process used to decide whether you’re eligible for life insurance, how much coverage you can get, and what you’ll pay.

• Technology has sped up many approvals. Some life insurance applications are approved quickly — sometimes even the same day — while more complex cases may require additional review.

• Underwriters look at the full picture. Age, sex, health history, lifestyle habits, occupation, financial information, and existing coverage all help determine risk and pricing.

• A “no” isn’t always permanent. Applications can be postponed or declined for timing or stability reasons, but other insurers or product options may still be available.

• The goal of underwriting is fairness and long-term stability. Careful underwriting helps keep life insurance premiums reasonable and ensures coverage works as intended when it’s needed most.

What is insurance underwriting and why does it matter?

Underwriting is the process insurers use to assess risk when you apply for life insurance, or other types of insurance products. In practical terms, it determines whether you’re eligible for coverage, how much coverage you can get, and what you’ll pay.

For life insurance, underwriters evaluate factors such as your health, lifestyle, age, and occupation to estimate the likelihood of a claim and price coverage accordingly. However, the process isn’t the same as buying a product off a shelf.

“It’s not like buying a coffee maker in a store, where the same model is sold to anyone,” says Fogarty. “Underwriters look at whether the product is suitable for you and how it should be priced.”

So why does underwriting matter? Because it helps keep life insurance premiums fair and stable. When risk is assessed carefully and pricing reflects individual circumstances, premiums are more likely to be affordable for everyone.

Underwriting also supports an efficient claims process. Reviewing and accurately disclosing your information upfront helps make your claims process go smoother later on.

“You want to make sure what’s disclosed matches your records — no surprises,” says Fogarty. Underwriting isn’t about creating obstacles. It’s about getting the details right, so life insurance does what it’s meant to do — provide protection when it’s needed most.

What does a life insurance underwriter do?

A life insurance underwriter reviews applications to determine whether coverage can be offered — and under what terms.

In practice, that may involve:

• Approving coverage as applied for

• Adjusting pricing based on risk

• Requesting additional information

• Postponing or declining coverage

At its core, underwriters assess risk — and the job requires careful analysis, not simply ticking boxes on a checklist.

“An underwriter must have very strong medical knowledge,” says Fogarty. “If you have a medical impairment, we may need to delve deeper. What type of medication are you taking? Do you have complications? Is the condition stable?”

Decisions are based on facts. Underwriters rely on medical guidelines and actuarial data built on long-term health trends. When needed, they may request medical records before making a final decision.

“As Chief Underwriting Officer, my team sets the policies and practices for people who apply for life insurance,” Fogarty explains. “These guidelines help ensure decisions are consistent, premiums are set appropriately, and consumers are treated fairly.”

What factors do underwriters consider?

When you apply for life insurance, underwriters don’t look at just one thing. They examine at a combination of personal, medical, lifestyle, and financial factors to assess risk and set pricing fairly.

Here’s what typically comes into play:

Age

As we age, the likelihood of health events increases — and premiums generally reflect that.

Sex

On average, women live longer than men. Because life expectancy data influences pricing, females often pay lower premiums for the same coverage.

Overall health

Your current health matters. So does your medical history. Underwriters consider conditions, medications, weight, blood pressure, cholesterol levels, and how well issues are managed.

“We ask you medical questions so we can understand your overall health,” says Fogarty. “Is there something that requires a higher premium — a slight surcharge — or additional review?”

In general, Canadians in good health tend to qualify for lower premiums than those with significant or unstable medical conditions. But having a health condition doesn’t automatically mean you won’t qualify.

“Not everyone’s in perfect health,” says Fogarty. “People do have health conditions. It depends on what it is and how it’s managed.”

Family medical history

Certain illnesses can run in families. A history of conditions such as heart disease or cancer in close relatives may be considered.

Smoking, vaping, tobacco use, or substance use

Tobacco use significantly affects long-term health risk. “Actuaries price smokers at a higher rate than non-smokers,” says Fogarty. Some insurers may offer lower premiums after a period of being nicotine-free (often 12 months). However, nicotine products, including many cessation aids, may still count as tobacco use.

Alcohol or substance use — including frequency and related health impacts — may also influence an assessment.

Learn more: Life insurance for smokers

Hobbies/activities

Extreme recreational activities, like some types of backcountry skiing or bungee jumping, can also factor into underwriting decisions. “We ask about extreme sports,” Fogarty says. “It doesn’t mean you’re uninsurable, but we need to understand the level of risk.”

Policy type and coverage amount

The type of policy — term or permanent — and the amount of coverage can also affect pricing. “It depends on the type of product you apply for and the face amount,” Fogarty notes.

Term life insurance generally costs less because it covers a set period. Permanent life insurance provides lifelong coverage and typically costs more.

Financial information

Underwriters typically ask about your income and overall financial picture. The goal isn’t to pry — it’s to make sure the amount of insurance makes sense based on your circumstances.  “The average-sized policy is approved with limited financial information,” says Fogarty. “For example, we’ll usually ask about your income and net worth.” For larger amounts of life insurance, underwriters may take a closer look at your financial picture.

Existing life insurance

Underwriters also look at any coverage you already have. If you’re applying for additional coverage, they want to understand how it all fits together.

Learn more: What Affects Your Life Insurance Premiums?

How does the process of underwriting work?

Once you hit submit, your application moves into underwriting. From there, the process typically follows a few key steps.

“The process depends on the type of policy, the face amount, and the complexity of the case,” says Fogarty. “But in today’s world, more and more applications are being approved at the point of sale.”

For individuals with more complex health history, here’s a rough roadmap of a typical process:

Step 1: Initial review

An underwriter reviews your application to see whether there’s enough information to make a fast decision. That includes your health and lifestyle answers, coverage amount requested, and any other relevant details.

If the application is straightforward, a decision may be made quickly — sometimes even the same day. “For many people with straightforward medical histories, applications can move through quickly,” says Fogarty. AI-backed models can also help to underwrite those cases. “That frees up our underwriters to focus on the cases that need a closer look,” she adds.

Step 2: Follow-up as needed

If clarification is required, you may be asked to provide additional information. “Be open and honest on your application,” says Fogarty. “If there’s a complex medical history, the underwriter may access copies of your records from your doctor.”

Step 3: Medical evidence when required

Depending on your age and the coverage amount, you may need to complete a medical exam or provide lab samples.

This can include:

• A paramedical exam to collect height, weight, blood pressure, and pulse

• A blood test

• A urine sample

• A health interview conducted by phone

Not every applicant will need medical testing. Many policies today can be approved without fluids, especially at certain coverage levels.

“There’s a lot your blood and urine can tell us, but we also have other ways to gather the information we need. At RBC Insurance, we’re working to avoid taking these body fluids, so more people can buy life insurance without the process feeling as intrusive,” says Fogarty.

Step 4: Risk assessment and decision

Once all required information is gathered, the underwriter evaluates the overall risk and determines:

• Whether coverage is approved

• The amount of coverage offered

• The premium and terms

In some cases — particularly for higher coverage amounts or unusual risks — an application may require additional internal review before a final decision is made.

What information is required for underwriting?

Depending on the policy and coverage amount, you. will be asked to provide:

• A completed health and lifestyle questionnaire

• Information about existing life insurance policies

• The names and relationships of your beneficiaries

Depending on the coverage amount, or if you are purchasing life insurance for a business, you may also be asked to provide financial statements or tax documents.

Not every applicant will need to provide all of these. Requirements vary based on your age, health history, and the amount of coverage requested.

What are the outcomes of underwriting for life insurance?

Once underwriting is complete, you’ll get a decision. There are four main possibilities — and none of them are personal. They’re simply based on how your health and risk factors fit within the insurer’s guidelines.

Here’s what each one generally means:

Approved as standard

This is the straightforward outcome: You’re approved at the regular premium rate. In underwriting terms, “standard” means your overall risk is considered typical for someone of your age and sex, based on long-term data. Generally, you get the coverage you applied for at the premium quoted.

“Standard just means that you have no health issues that would warrant a surcharge, and that you’re expected to live as long as most people your age without an impairment,” says Fogarty.

Approved with a rating

You’re approved, but at a higher premium. This typically happens when there’s a health condition or risk factor that increases the likelihood of an early claim. The insurer adjusts the price to reflect that.

Postponed

Based on the available information, this means the insurer can’t make a final decision right now. Often, it’s about timing. Maybe you’ve recently started a new medication, are in the middle of treatment, or are waiting on test results. In many cases, you can reapply once things are more stable. “A postponement isn’t an outright ‘no,’” says Fogarty. “It’s usually a ‘not right now.’”

Declined

A decline means the insurer can’t offer coverage under its current guidelines. That can be disappointing, but it’s not always the end of the road.

“Just because one company thinks you’re uninsurable, there are many insurers out there with many different approaches, risk tolerances, and products,” says Fogarty.

In some cases, you may qualify elsewhere or be eligible to apply again in the future if your situation changes. “What they’re looking for is stability,” says Fogarty. “If you’re not insurable today, ask when you might be reconsidered. It could be a timing issue.”

You may also want to explore alternative options. For example, RBC Insurance offers Guaranteed Acceptance Life Insurance, which does not require a medical exam or health questionnaire. Coverage amounts are generally lower and premiums higher than fully underwritten policies, but it can provide a starting point for protection.

Take the next step

Underwriting might sound technical, but it’s really about one thing: making sure life insurance does what it’s supposed to do when it matters most.

If you’ve been putting off applying because it feels complicated or invasive, you’re not alone. But in many cases, it’s more straightforward and less expensive than people expect. “For some people, you might sit with an advisor and know the same day that you’ve been approved,” says Kristine Fogarty.

And if the answer isn’t what you hoped for? That doesn’t always mean the door is closed. Sometimes, it just takes a conversation.  “A good advisor is worth their weight in gold,” she says. “They can guide you through the paperwork and questions.”

For many families, the monthly cost of term life insurance can be less than a streaming subscription or a few takeout dinners. But the protection it provides can make an enormous difference if something unexpected happens.

“People think insurance is more expensive than it is,” says Fogarty. “Even with minor health issues — what do you have to lose by applying? Life insurance gives peace of mind.” Talk to a licensed RBC Insurance advisor to understand your options. Because at the end of the day, this isn’t about paperwork — it’s about protecting the people who depend on you.

FAQs about insurance underwriting

Is underwriting always required for life insurance?

Yes. Every life insurance application goes through underwriting in some form. In many cases, automated tools and predictive models now support the review process, which can speed up decisions for straightforward applications. More complex cases may still require additional medical information or documentation.

How long does underwriting take for insurance?

It depends on the policy, coverage amount, and medical history. Some applications are approved instantly. Others may take longer if additional records are required.

What should I do if I’m denied insurance coverage?

A decline isn’t always final. It may be related to timing, a recent diagnosis, or a condition that needs to stabilize. And a decision from one insurer doesn’t necessarily mean you won’t qualify elsewhere — different companies have different guidelines, risk tolerances, and products. You can also explore options, such as Guaranteed Acceptance Life Insurance, which does not require a medical exam or health questionnaire and generally provides automatic acceptance.

Share This Article