Life Insurance Underwriter: Steps To A Successful Career

Life insurance underwriters are financial professionals who evaluate and determine the risks of insuring individuals and families. They decide on the premiums and coverage amounts for life insurance policies, taking into account factors such as age, health, and medical history. To become a life insurance underwriter, a bachelor's degree is typically required, preferably in a field like finance, business, economics, or mathematics. Strong analytical, computer, and communication skills are also essential. Entry-level positions are available, with on-the-job training provided, and professional certification is often expected for career advancement.

Entry requirements: a bachelor's degree in a relevant field, and/or significant work experience

To become a life insurance underwriter, you will typically need a bachelor's degree in a relevant field, such as business, finance, economics, accounting, or mathematics. While some employers may require a master's degree, it is not always necessary.

A degree in one of these fields will provide you with a strong foundation in analytical and mathematical skills, as well as an understanding of business practices and procedures. For example, a degree in accounting will cover topics such as accounting principles, the accounting cycle, managerial accounting data, and business statistics. On the other hand, a finance degree will focus on business finance, including asset valuation, capital budgeting, and financial markets.

In addition to a bachelor's degree, some employers may also look favourably upon relevant work experience. Entry-level positions within insurance organisations can provide valuable experience and allow professionals to learn the required industry skills, rules, and policies. Examples of such roles include insurance policy processing clerks or procurement clerks. Alternatively, gaining experience as an insurance agent or broker can also be a good way to get started in the field.

Skills: analytical, computer, communication, and math skills

Analytical Skills

Insurance underwriters need strong analytical skills to assess credit applications and the risks associated with IPOs, securities trading, debt issues, equity markets, and insurance applications. They must be able to make decisions and balance risks and rewards. This requires basic knowledge of financial markets.

Computer Skills

Computer literacy and proficiency are essential for insurance underwriters. They must be able to use various technical programs and software to analyse risk data and complete tasks. This includes using generic programs like Excel and specific software tailored to the employer or sector. Basic computer skills are important for learning to navigate industry-standard programs quickly.

Communication Skills

Effective communication skills are crucial for insurance underwriters as they need to convey their findings and interact with clients, colleagues, insurance agents, and other financial professionals. They must be able to communicate the results of their analysis clearly and make important assessments and decisions.

Math Skills

Math skills are vital for insurance underwriters to verify information and calculations made by computers. Courses or a bachelor's degree in a relevant field can help develop these skills.

Training: on-the-job training under a senior underwriter

Training under a senior underwriter is a crucial aspect of becoming a life insurance underwriter. Here are some detailed insights into what this training entails:

Learning the Basics

When you first begin your role as a trainee life insurance underwriter, you'll be working under the guidance of a senior underwriter. During this initial phase, you'll be introduced to the basic principles and applications used in underwriting. This foundational knowledge will serve as a launching pad for your career. It's important to absorb as much as you can during this time, as it will lay the groundwork for your future responsibilities and decision-making.

Understanding Risk Factors

Senior underwriters will educate you on the various risk factors that come into play when assessing insurance applications. You'll learn how to identify and evaluate these factors, which could include an applicant's age, health, financial history, and other relevant criteria. Understanding risk factors is essential for making informed decisions about whether to offer insurance coverage and determining premium amounts.

Utilizing Underwriting Software

With the insurance industry heavily relying on technology, you'll need to become proficient in using underwriting software. Your senior underwriter will guide you through the process of inputting applicant information into these programs and interpreting the resulting recommendations. This software assists in analyzing risk and making more accurate decisions.

Developing Analytical Skills

Analytical skills are critical for insurance underwriters, and your senior underwriter will help you hone these abilities. You'll learn how to assess credit applications, evaluate risks associated with different types of insurance, and make balanced decisions. This includes weighing the risks and rewards and developing a keen eye for detail.

Gaining Independence

As your training progresses, you'll gradually gain more independence. Your senior underwriter will start assigning you more complex tasks and allowing you to work on your own. This phase of your training will help you build confidence and refine your skills. It's a period of supervised independence where you can put your knowledge into practice while still having the support of your mentor.

Handling Customer Interactions

Dealing with customers is an essential aspect of the job, and your senior underwriter can provide valuable insights into effective communication and customer service. You'll learn how to discuss policy options with insurance brokers and customers, address their queries, and negotiate terms. Strong interpersonal skills are vital for building relationships and ensuring customer satisfaction.

Certification: not always required, but can lead to higher-level roles

While certification is not always required to become a life insurance underwriter, it can be beneficial for career advancement. Obtaining certifications can demonstrate your skills and dedication to the field of insurance underwriting. It can also enhance your career prospects and qualify you for advanced or senior roles in the future.

There are several certification options available, such as the Chartered Property and Casualty Underwriter (CPCU) designation, which is geared towards professionals with experience in certain parts of the insurance industry, including risk management, casualty insurance, and property insurance. This certification is offered by The Institutes and requires completion of a curriculum and a passing grade on an exam.

Another option is the Associate in Commercial Underwriting (ACU) certification, intended for commercial insurance underwriters who assess risks arising from losses covered by insurance. This certification can be obtained through organisations like the Insurance Institute of America.

Additionally, the Life Underwriter Training Council Fellow (LUTCF) certification is offered by The National Association of Insurance and Financial Advisors. This program covers practice management, life insurance, investment products, and risk management.

Pursuing certifications can keep you updated with new insurance policies, technologies, and changes to regulations. It also showcases your commitment to professional development and can make you a more attractive candidate for higher-level positions in the insurance underwriting field.

Career progression: from entry-level to senior underwriter

Entry-level

As an entry-level insurance underwriter, you will work as a trainee or assistant under the supervision of a senior underwriter. Your initial responsibilities will focus on data collection and basic application processing. You will need strong analytical skills to evaluate risk factors and make data-driven decisions, as well as effective communication skills for conveying your findings and interacting with clients and colleagues. Attention to detail is also vital to ensure accuracy in your assessments.

Mid-level

With a few years of experience, you may take on more complex applications and work more independently. You can also pursue certification to enhance your career prospects and qualify for more senior roles. Certification options include the Chartered Property and Casualty Underwriter (CPCU), Life Underwriter Training Council Fellow (LUTCF), and Chartered Life Underwriter (CLU).

Senior-level

Senior underwriters have advanced knowledge of insurance principles and industry regulations, as well as strong analytical and problem-solving skills. They are responsible for mentoring and guiding junior underwriters. Senior underwriters may also be involved in developing company policies and procedures.

Management-level

To advance to a management position, such as underwriter manager, certification is typically required. In addition to technical skills, management-level underwriters need strong leadership and strategic thinking abilities. They are responsible for overseeing the underwriting team, making high-level decisions, and ensuring compliance with regulations.

Frequently asked questions