Life Insurance Underwriting Classifications

In my last entry, Underwriting Life Insurance….What Every Trustee Should Know, I wrote about the steps that should be taken to ensure the best pricing when purchasing a life insurance policy. The difference in underwriting offers can play a large role in the success of the ILIT you are managing.   After all, keeping a policy in force over the lifetime of the Insured is much harder if the policy pricing is dramatically higher. In a new policy placement case I reviewed, the offers from the 3 carriers deemed to have the best chance of providing economical coverage were dramatically different, causing a wide gap in pricing. A male, age 52, who was large in build, but with no outstanding health issues, was applying for $5,000,000 of 10 year Level Term coverage. As you can see below, he received offers that varied in cost by almost 100%.