Accelerated underwriting offers several advantages for life insurance applicants.
It speeds up the application process and does not require a life insurance medical exam. However, this faster version of traditional underwriting is not available to everyone. It is usually offered to applicants who are healthy, relatively young, and financially stable.
Sounds like you? Why wait up to six weeks for approval when accelerated underwriting can get you a policy in just 24 to 48 hours. Let's cover the details.
What is Accelerated Underwriting?
Accelerated underwriting lets you purchase a life insurance policy without having to undergo a paramedical exam. The insurer relies on your existing records instead of a medical exam to evaluate your eligibility and determine your rate. Forgoing the insurance medical, in turn, speeds up the application process.
From start to finish, the traditional life insurance approval process can take up to six weeks. Most of that time is used for underwriting — the process followed by insurance companies to assess the amount of risk you present to them.
Can’t wait six weeks to get a life insurance policy? You may want to consider policies with accelerated underwriting. You could easily get approved within a few days, or with certain insurers, within 24 hours.
If you are aged between 18 and 60 and are in reasonably good health — i.e. having a healthy BMI and not more than one or two minor underlying conditions — many insurers might allow you to forgo the life insurance medical exam. Instead, they will look at your existing records to determine your premium rate.
How does it work?
Accelerated underwriting life insurance is not a different type of life insurance. Rather, it is a quicker way of getting coverage. You can go from applying to having life insurance in just a few days.
So, how is accelerated underwriting able to achieve faster turnaround times?
It does so by dropping the two most time-consuming steps of traditional underwriting — the medical exam and Attending Physician Statement (APS). Instead of relying on them, the insurer looks at various reports — like medical records, your prescription history, etc — to evaluate the level of risk you represent. If these reports corroborate the information provided and do not raise any concerns regarding your health, you will likely receive approval without undergoing a medical.
Accelerated underwriting is not the same as simplified underwriting. Like accelerated underwriting, simplified underwriting also doesn't need a medical exam. But it's not as detailed and is usually used for more expensive life insurance plans, like the ones that cover funeral expenses.
Benefits of Accelerated Underwriting
Shorter application process
With a traditional life insurance policy, the typical wait time for approval is four to six weeks. Sometimes, it is even longer, e.g. when the insurer wants to access the Attending Physician Statement (APS). In contrast, most accelerated underwriting life insurance policies promise approval within a week. In some cases, you can get approved in just one day.
Lets you forgo the life insurance medical exam
If you would rather avoid the medical exam that is part of the standard underwriting process, accelerated underwriting life insurance is an option.
Drawbacks of Accelerated Underwriting
Not suitable for everyone
A serious underlying health condition can make you ineligible for accelerated underwriting, and so can a host of other things, like a criminal record or recent DUI conviction.
Not available for all policy types
Generally, life insurance companies offer accelerated underwriting with term life products. If you need a whole life or universal life policy, you may not skip the life insurance medical exam.
You may still have to undergo a medical exam
During the information-gathering phase, if the insurer comes across certain negative risk factors, it may ask you to undergo full underwriting to get approved. You will then have to take a paramedical exam. Depending on its results, you will get an attending physician statement, which will increase the turnaround time at the same time.
Who is qualified for Accelerated Underwriting?
Life insurance companies offer accelerated underwriting to applicants whom they regard as low-risk. You are more likely to qualify for it if you meet the following criteria:
Applicants who are in reasonably good health and have no more than one or two minor pre-existing health conditions are likely to be offered accelerated underwriting.
Because smoking cigarettes increases your risk of health conditions that can reduce your life expectancy, insurance companies tend to offer accelerated underwriting only to non-smokers.
Typically accelerated underwriting is reserved for applicants in the age group of 18 – 60 years.
Most insurance companies offer accelerated underwriting for only term life insurance policies.
With some insurance carriers, accelerated underwriting is only available if the death benefit does not exceed a certain amount, like $500,000.
Good Financial Shape
A recent bankruptcy will likely make you ineligible for accelerated underwriting, as would a poor credit report.
Keep in mind that each provider has its underwriting methodology. Thus, the eligibility criteria for accelerated underwriting may vary from one company to another. Additionally, an insurance provider may offer accelerated underwriting to only a certain percentage of applicants who meet its general criteria.
A complicated health profile, a dangerous occupation or hobby, or a serious pre-existing condition will likely disqualify you for accelerated underwriting. A family medical history of a serious illness, such as breast or stomach cancer, may also disqualify you.
If you are turned down for accelerated underwriting, that doesn’t mean you can’t get coverage. You will just have to go through a paramedical exam to qualify.
Where can I get Accelerated Underwriting?
While a few Canadian insurers have been offering accelerated underwriting for some time now, some others have just doing it, and many others are yet to embrace it. If you are interested in accelerated underwriting life insurance, a few names that you must include in your list include:
Accelerated underwriting speeds up the life insurance application process, but it is not for everyone. To be eligible, you must meet the insurance company’s criteria. While eligibility requirements vary by insurer, there’s a good chance of making the cut if you are a healthy individual aged between 18 and 60, in good financial health, and have a clean driving record.
Not sure if you are eligible for accelerated underwriting? A Dundas Life advisor can help you find out. If you are not, we will help you find the best alternative.
Frequently Asked Questions
What is simplified underwriting?
Simplified underwriting, like accelerated underwriting, lets you buy a life insurance policy without having to undergo a paramedical exam which is part of the traditional underwriting process. However, this is where the similarities between simplified underwriting and accelerating underwriting end.
Policies issued through simplified underwriting are costlier than fully-underwritten plans. In contrast, with accelerated underwriting, you pay the same price that you would pay for a medically-underwritten plan. Simplified underwriting also often carries much lower death benefits and includes a two- to three-year waiting period. Nonetheless, it is an option for those who do not qualify for a traditional policy because of health issues.
How long does it take to qualify using accelerated underwriting?
Traditional underwriting usually takes anywhere between four to six weeks. But it can take much longer if the insurer requires Attending Physician Statement (APS). Because accelerated underwriting involves neither a medical exam nor APS, it has much shorter turnaround times. Most insurers will likely issue a policy within seven days of applying. With some, you may even get a copy of your policy within just 24 hours.
Do I have to pay more with accelerated underwriting?
Accelerated underwriting is there to speed up the underwriting process by forgoing the life insurance medical exam and APS. It is not there to make life insurance more expensive. You pay the same premium rate that you would pay with a medically-underwritten policy.
How much insurance can I get with accelerated underwriting?
The amount of coverage that can be bought with accelerated underwriting depends on your age and insurance company. Typically, younger applicants are more likely to be approved for larger death benefits than older applicants. For example, some insurance companies offer up to $1 million in coverage to applicants in the age group of 18-45 but cap the death benefit at $50,000 for those in the age group of 46-60.
Who offers accelerated underwriting?
Sun Life Financial, Manulife, Empire Life, Canada Protection Plan, and Canada Life are some of the players in the Canadian life insurance landscape that currently offer accelerated underwriting.
Are there any limitations to accelerated underwriting?
Accelerated underwriting may not be available for all kinds of life insurance policies. Most insurance companies only offer it with their term life insurance products — not permanent life plans, like whole life insurance or universal life insurance. Additionally, the maximum coverage amount available is usually capped. Most insurers will not likely offer you more than $1 million in coverage, even if you otherwise qualify and can afford the premiums.
Who is eligible for accelerated underwriting?
Each insurance company sets its eligibility criteria, so there is no one-size-fits-all answer to this question. That said, if you are in a reasonably healthy individual between 18 and 60, have no pre-existing illness, and have no red flags on your credit report, you have a good chance of qualifying for accelerated underwriting, regardless of the insurer.