Life Insurance and Underwriting – The LSM Difference

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LSM Insurance and its broker network have over 50 years of combined life insurance experience. Back in 80’s and even the 90’s almost all life insurance advisors were captive agents captive agent. Over the last 20 plus years we have seen many changes in the industry. A major change that is not often discussed is the way life insurance companies now underwrite insurance applications i.e. the steps they take to determine what rate a client will pay.

In years gone by life insurance companies use to take on all the risk for an insurance application. In today’s environment much of the risk is shared with reinsurance companies.

A reinsurance company shares the risk of an insurance policy with the insurance company.  An example might be a $1 Million Term 10 policy with RBC Insurance – RBC Insurance may decide to take on $500,000 of the risk and share the other $500,000 of the risk with the reinsurer. The end result is the applicant must meet the risk profile of two companies.

Underwriting related issues are further complicated by the fact the criteria used by insurance companies and their reinsurers is constantly changing. Applicants travelling to the certain areas in the world may be issued at standard rates today but might be declined or rated 6 months from now.

A brokers ability to work with a multitude of insurance companies and their ability to keep in close contact with the respective underwriters can have a major impact on the premium the applicant pays or if he/she qualifies for insurance.


We recently had a 49 year old female with a history of high blood pressure and cholesterol approved for $350,000 of Term 20 coverage at standard rates after she had previously been rated plus 50% at another company. The reason for the rating was her high blood pressure – but it turned out she had white coat hypertension – which is a phenomenon where the applicant exhibits elevated blood pressure in a clinical setting but not in other settings.

We wrote a cover letter explaining this to the underwriter and her doctor was able to verify the information. The net result she is now paying $78.57 a month instead of $123.42 a month. A savings of $10,764.00 over the 20 years.

If you have any questions with your particular situation please do not hesitate to contact us at 1.866.899.4849.

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  • Jo Mar
    June 21, 2014 at 11:43 am

    I’m 78 years old. Just bought an apartment and got RBC mortgage 210k ca$. Can I get reasonable life insurance to protect my home. I have good health.

    • LSM Insurance
      June 21, 2014 at 11:50 am

      Hi Jo,

      Thanks for the note. We insure people 85 and under so we can definitely help.

      The premiums depend on your smoking status and the type of plan.

  • John bilodeau
    November 7, 2013 at 11:08 am

    I think T.Smith is referring to the ethical component of Life Underwriting.

    To quote Duncan Minty on this issue:

    “the underwriter looks beyond the physical characteristics of a risk, to the myriad of non-physical factors which could influence the likely size and frequency of claims. A simple example would be in motor insurance, with the car representing the physical hazard and the driver representing the moral hazard, through their driving experience, convictions, accident record and the like. Equivalent examples from the world of commercial insurance could be the professional indemnity underwriter assessing certain characteristics of a firm of advisers or an employers’ liability underwriter looking at the profile of a manufacturing firm. They’re both looking for evidence of how the management of those companies are behaving when servicing clients or safeguarding employees. – See more at:

    He has a few good blog posts on the topic of Ethical Underwriting and Moral Hazard.

    Hope this helps


    • LSM Insurance
      November 7, 2013 at 11:23 am

      Thanks John. You make some good points. I think its up to the broker to make sure that he gets the underwriter the correct information and an understandable manner. A cover letter on complex cases often helps.

  • T. Smith
    May 28, 2013 at 11:53 am

    What is Moral Hazard? is it possible for an underwriter to gauge? If so, is there a price associated? Please explain. Thank you, T. Smith

    • LSM Insurance
      May 28, 2013 at 2:12 pm

      Thanks for the note. But I’m not sure what you are referring to. Can you give an example of a moral hazard.

  • LSM Insurance
    March 25, 2013 at 4:22 pm

    Thanks for the note. Insulin diabetes will usually result in a rating the % amount depends on many variables. You may want to first consider applying for a Simplified issue policy. If you are declined and than apply for a Simplified issue plan your options will be more limited.

  • Francis
    March 25, 2013 at 1:00 pm

    I am a 49 Year Old Insulin Dependent diabetic.

    I am a little overweight bought not too bad.

    Can I get life insurance and how much extra am I looking at?