What underwriters really look for in a life insurance application
Life insurance underwriting sounds intimidating. For many Australians, it feels like a black box that decides whether you get cover, pay more, or get declined. Life insurance underwriting is often misunderstood as a gatekeeping exercise. In reality, life insurance underwriting is a structured risk assessment process that looks at health, work, lifestyle and finances to decide what terms an insurer can offer today.
The anxiety usually comes from not knowing what underwriters actually look for and how much control you have over the outcome.
This article breaks it down plainly. No sales pitch. No scare tactics. Just what matters, why it matters, and how preparation changes results.
What underwriting actually is and what it is not
Underwriting is not about eliminating risk. It is about pricing risk fairly across a pool of policyholders.
“Underwriting is basically us having a look at the client’s health and occupation and financial situation and assessing what kind of risk there might be in amongst all of that.”
Underwriters are not trying to catch people out. Their role is to determine whether cover can be offered and on what terms. That could be standard rates. It could include loadings. It could involve exclusions. In some cases, it could mean declining a benefit.
“They want to try and give insurance to people, but they’ve got to do it so they can still make money at the end of the day.”
Life insurance underwriting assesses risk as at today. Past medical history still matters, but recency, severity and stability matter more than the label of a condition.
What underwriters actually look at first
Life insurance underwriting focuses heavily on medical disclosures, but that is only part of the picture.
Health history
Underwriters look at:
Body Mass Index and build
Blood pressure and cholesterol
Mental health history including anxiety, depression and stress leave
Musculoskeletal issues such as back, shoulder and knee problems
Chronic conditions like diabetes, asthma and cardiovascular disease
Family history of early onset conditions
Uncertainty is the biggest enemy of good terms. Vague disclosures create conservative assumptions.
“If in doubt, they will assume the worst.”
Lifestyle factors
Underwriting also considers:
Smoking or vaping
Alcohol consumption
Recreational drug use
Hazardous pursuits such as scuba diving, aviation, motorsports and mountaineering
These factors do not automatically lead to declines. They influence pricing, exclusions or policy availability.
Work and income
Occupation risk class matters more than most people realise. Manual work, irregular income and hazardous duties change how insurers view risk.
Employment stability also matters. Long gaps, frequent job changes or unclear income documentation can slow the process.
Why underwriting outcomes differ between insurers
One of the most frustrating experiences for clients is receiving very different outcomes from different insurers using the same information.
That happens because:
Each insurer uses its own underwriting manual
Reinsurers influence risk appetite
Claims experience differs across portfolios
Some insurers rely more heavily on offshore data, others use Australian-specific data
“Different insurers have a different appetite for where that normal range might sit and how big the loading might be.”
This is why life insurance underwriting is never one size fits all. A condition that attracts a modest loading at one insurer may be declined by another.
APRA data shows material variation in claims experience and acceptance rates across insurers, reinforcing why underwriting philosophies differ (APRA Life Insurance Statistics 2023).
Why pre-assessment changes everything
A pre-assessment is one of the most important steps in the life insurance underwriting process. It allows advisers to test outcomes before submitting a full application, having that first look at a client’s medical, occupation and financial history and saying can this person get insurance.
Pre-assessments help:
Identify which insurers are most suitable
Avoid unnecessary declines
Set realistic expectations
Reduce rework and delays
“It’s so important it gets done as soon as possible in the process.”
Without a pre-assessment, clients often end up applying based on price alone and discovering too late that the cheapest policy delivers the worst terms once loadings apply.
Real examples of how information changes outcomes
In practice, asking for more information can dramatically improve underwriting outcomes.
Information is power in this situation.
In one case discussed, a client disclosed an irregular heartbeat discovered during a mandatory employment medical. Without supporting evidence, all insurers declined. Once a copy of the stress test was provided, one insurer offered standard terms across all benefits.
“Read it at face value because we’re giving you an incredible amount of information.”
This is why detailed disclosures matter. Context often changes risk classification.
Common mistakes that lead to poor underwriting outcomes
The most common mistakes include:
Minimising or withholding information
Providing vague answers without dates or outcomes
Applying without testing the market
Choosing insurers based solely on price or features
Assuming default super cover is equivalent
ASIC has repeatedly highlighted that misunderstanding insurance terms and underwriting processes contributes to disputes and poor consumer outcomes (ASIC MoneySmart, Life Insurance).
Tips for smoother underwriting outcomes
For clients
Be honest and be detailed. Context matters.
Sometimes the story behind the situation is just as meaningful as the medical condition itself.
Mental health disclosures during COVID lockdowns are a common example. Temporary stress during extraordinary circumstances is not assessed the same way as long-term recurrent conditions.
For advisers
Pre-assess thoroughly. Build insurer relationships. Understand underwriting niches.
“Pre-assessments are your friend, not the enemy.”
Knowing which insurers are more flexible around BMI, mental health, hazardous occupations or chronic conditions can materially improve outcomes.
Why underwriting is worth the effort
Life insurance underwriting is complex because life is complex. It takes time, effort and detailed information. But the reward is cover that actually works when needed.
“Clients don’t want to hear they were denied something or had it increased by 100 percent, then be told we can try somewhere else.”
Preparation upfront leads to fewer surprises later. Better underwriting decisions mean better protection, clearer expectations and smoother claims experiences.
Key takeaway
Life insurance underwriting is not about finding reasons to say no. It is about understanding risk clearly enough to say yes on the right terms. With the right preparation, the underwriting process becomes predictable, transparent and far less stressful.
Resources
APRA. Life Insurance Claims and Disputes Statistics 2023
https://www.apra.gov.au/life-insurance-claims-and-disputes-statistics
ASIC MoneySmart. Life insurance explained
Australian Institute of Health and Welfare. Chronic conditions and risk factors