Life Insurance: Do Dependents Need Social Security Numbers?

Life insurance companies require sensitive information, including your social security number, to confirm your identity and prevent fraud. While it is not an industry requirement to have a social security number to obtain life insurance, most life insurance companies require it for the insured and beneficiaries for multiple reasons. If you don't have a social security number, you can still obtain life insurance, but the application process may be more difficult.

Identity confirmation and fraud prevention

Identity Confirmation

Life insurance companies need to make sure you are who you say you are. With identity theft on the rise, insurers use your SSN to confirm your identity. This is especially important as there is no national identification number in the US. While this is not an infallible method, knowledge of your SSN is considered a good indication that you are who you claim to be.

Fraud Prevention

Fraud prevention is a cornerstone of the insurance industry. Fraud exists in all forms of insurance, and SSNs help to prevent it. The MIB (formerly the Medical Information Bureau) keeps records of all life insurance applications and uses SSNs to track this information. This helps to weed out bad actors early on, such as those who have misrepresented themselves to another life insurance company.

Additionally, your SSN can be used to check prescription drug databases, credit reports, and criminal records, all of which help insurers estimate the level of risk associated with your application.

Alternative Forms of Identification

While most life insurance companies require an SSN, there are some that will accept other forms of identification, especially for non-US citizens. Alternative forms of ID include:

• A visa or green card
• A state ID card or non-driver photo ID card
• Employment authorization document (EAD)
• Individual Taxpayer Identification Number (ITIN)
• W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting)

MIB report checks

MIB, Inc. is a consumer reporting agency that provides individuals with the rights, protections, and privileges available under the federal Fair Credit Reporting Act (FCRA). MIB collects information about medical conditions and hazardous avocations with your authorization and reports this information to life and health insurance companies to assess your risk and eligibility during the underwriting process.

The MIB report includes any medical and personal information that MIB has in its database about you at the time of your request, along with the name of the MIB member company that reported the information and the date it was reported. The report also includes the names of any MIB member companies that received a copy of your medical and personal information, made an inquiry about you within the past two years, and received a record of inquiries made by other member companies.

You can request a free copy of your MIB Underwriting Services Consumer File once per year directly from MIB. To obtain a copy of your file, MIB will need to collect some personal information to accurately search their files. This information will be securely maintained by MIB and will only be used to process your request.

It's important to note that you may not have an MIB report if you haven't applied for individually underwritten life, health, disability income, long-term care, or critical illness insurance with a member insurer within the last seven years. Additionally, MIB codes used in the report represent broad categories of verified medical conditions or other conditions and are not used to determine your eligibility for insurance.

The MIB report is an important tool for insurance companies to assess your risk and eligibility, and it also helps keep premiums reasonable for everyone. By providing your Social Security Number, you can help ensure that the insurance company has access to the correct MIB report and other relevant information.

Prescription drug database checks

When applying for life insurance, your insurer will likely perform a prescription history check. This is standard practice for most, if not all, traditional life insurance policies. Insurers will review your prescription history to assess your overall health and price your policy accordingly.

In the US, major life insurance companies use large databases of prescription histories as a standard practice. This data is tightly regulated under the Health Insurance Portability and Accountability Act. Insurers can only access this data with your permission.

Prescription history is reviewed for medically underwritten coverage, which is often the most affordable type of life insurance. This review process helps insurers verify the information provided in your application and fill in any gaps.

It's important to be honest when disclosing your prescription history. While certain medications may raise red flags, they won't automatically disqualify you from coverage or increase your rate. The same medication could be prescribed for different conditions or to different people. Insurers review applications on an individual basis to understand the context of your prescription history.

If you're denied life insurance due to your prescription history, you can work with an agent to find a company with a more lenient underwriting process. Shopping around can help you find affordable life insurance options.

Credit report checks

Life insurance companies are increasingly using credit checks as part of the application review process. While your credit score alone won't impact your life insurance premiums, a credit check could help speed up the review and make it easier (and cheaper) to get life insurance if you have good credit. Even if you have poor credit, your credit will only be one of many factors that the insurance company considers.

When a life insurance company checks your credit, it may be looking for particular information from within your credit history. For example, a bankruptcy filing in your credit report could impact your ability to be approved for a policy and its cost.

The insurance company will use your financial history to calculate an insurance score for you. If you've filed for bankruptcy, regularly miss credit card payments, or have a history of driving violations, you could face higher premiums or application rejections.

Credit-based insurance scores are made up of five factors:

• Payment history (40%) — This includes both the timeliness and accuracy of your payments on past debts.
• Outstanding debt (30%) — This component accounts for how much total debt you currently hold.
• Credit history length (15%) — This looks at the length of time you have held a line of credit.
• Pursuit of new credit (10%) — If you have recently applied for lines of credit, it factors in here.
• Credit mix (5%) — All the different types of credit you have are considered (auto loans, credit cards, mortgages).

Credit checks performed by life insurance companies are "soft pulls", meaning they have absolutely no effect on your credit score.

Criminal record checks

Life insurance companies will usually perform a criminal background check on applicants. This is because insurers view people with criminal records as higher-risk, and data shows that people with criminal records tend to live shorter lives. However, having a criminal record does not automatically disqualify you from getting life insurance.

If you have a felony on your record, you will need to wait at least a year after your conviction or until your probation period is over to qualify for most life insurance policies. If you are currently on probation, on parole, or in jail, insurance companies won't approve your application until you've been off probation for at least a year.

If you have a misdemeanour or lesser infraction on your record, this usually won't change your premiums. However, multiple or recent charges will raise flags for insurers.

The best way to find the right life insurance policy is to work with an independent broker, who can compare guidelines from multiple insurance companies at the same time.

It's important to be honest about your entire criminal record when applying for life insurance. Lying on your application is a type of life insurance fraud, and the insurance company will have the right to decline your policy.

Frequently asked questions