You're being evaluated on several factors when you apply for a life insurance policy. Insurance companies have underwriting standards. They'll compare your information against those standards to assess how much of a risk you are. From there, you'll either be offered a coverage price or your application will be declined. The insurance company doesn't just look at what you put down on your application. In many cases, the company will pull additional information about you from a consumer reporting agency. One of the companies that provides this info is LexisNexis.
LexisNexis uses its databases to calculate an insurance score. Your insurance score represents how likely you are to file an insurance claim based on your past habits. Companies use this score in combination with other factors on your application to determine if they can approve you and at what rate. Your score will also include what is a "reason code." Reason codes are the primary factors that influenced your score.
LexisNexis is a type of credit report. Most people think of credit reports as the information that comes from the three major credit reporting bureaus: Transunion, Equifax, and Experian. However, there are actually 49 different credit reports that can be pulled when you seek approval for various financial products or during employment screening.
The score generated by LexisNexis is called an insurance score. Your insurance score is not the same as the credit score used when you apply for a credit card or loan. An insurance score adds in additional information and weighs items differently than a standard credit report. Your LexisNexis report includes any:
The insurance underwriters will take all of this information into account when offering you a policy. In some instances, information on your LexisNexis report could prevent you from getting approved. For example, some life insurance companies won't grant policies to people who've declared bankruptcy within the last 12 to 24 months. You might also have trouble obtaining a policy if you're currently being charged with a felony or if you've recently been released from jail.
Your LexisNexis report does not contain your:
However, you'll provide many of those variables yourself when you're applying for a life insurance policy. It might all seem like a lot of information, but insurance underwriters want to make sure that offering you a policy makes financial sense for the company.
Insurance companies use credit information to calculate the risk of offering you a policy. A pattern of risky financial behavior is associated with a higher risk of mortality. This means that people with a low score are a greater risk to the insurance company.
Yes. You can order a free copy of your LexisNexis report once a year. There are three options to obtain your report:
You'll need to provide your full name, Social Security number, current address, and date of birth in order to receive your report. You can dispute any information in your report that isn't accurate. LexisNexis will investigate your claim and remove the information if it's found to be incorrect.
Most companies will pull your information from a few different sources to get a complete picture of your financial and lifestyle habits. In addition to your LexisNexis report, many companies will do what is known as a "soft pull" of your general credit. A soft pull provides information to companies without costing you points off your credit score. Underwriters might also pull your:
It's important to be honest on your life insurance application. It might seem tempting to leave out information in the hopes of getting a lower rate, but it's not worth the risk. As you can see, Insurance companies have ways of checking for fraud. There's a good chance they'll find out if your application wasn't accurate. A company that was willing to work with you is a lot more likely to reject your application if they have to find the information on their own.
You can order a copy of your LexisNexis report so you can see what the insurance company does. If you're concerned your financial or other history might prevent you from getting a policy, reach out to one of our trained agents. We can help find companies that will fit your circumstances and offer you a policy even if you're a high-risk candidate.