Understanding the Underwriting Process, Part 2
Now, what about actual rules companies have for how they underwrite relative to death benefit levels?
These terms and processes are all about Reinsurance. Effectively all insurance companies reinsure their larger risks. There are relatively few reinsurers in the market and regardless of the insurance company name on the cover of your policy, if it is large enough, they are mostly reinsured by the same reinsurers. In other words, whether it’s $5,000,000 with ABC Life Insurance Company or $100,000,000 with XYZ life Insurance Company, neither may be interested in paying out the entire death benefit from their own pocket when the insured individual dies. Read more…