You have the right to pay a fair price (or premium):

A financial services company and advisor owes a duty to charge a fair and reasonable amount for their products and services. They should explain how costs, fees and premiums may fluctuate in the future. Some types of financial products are more regulated than others.  

This varies by product and also by state. For example, auto insurance, homeowner’s and long term care insurance rate changes must almost always be approved by the State Department of Insurance. It’s important to get multiple quotes because all premiums are not alike.

How do you lower your costs and expenses?

Each dollar that you save on expenses is an extra dollar that you gain. Your advisor and financial services company should work with you on strategies to reduce your costs. Each financial services company and product company will have their own discounts and other ways to reduce this. Here are some general strategies to keep in mind:

  • Proper product type: Purchase only the financial products that meet your needs and goals.  Don’t purchase a product because it sounds good or it comes recommended, always check it out for yourself.
  • Discounts: Be sure to ask about this when researching each company.
  • Review the options for your circumstances when underwriting is involved (mostly loans and insurance): Underwriting criteria varies by company. A certain issue may cause an increase with one company while another company will ignore it.

What is the insurance underwriting process?

It is a risk assessment performed when you apply for most types of insurance. You should understand the process, which is specific to each type of insurance coverage. Common items reviewed during the underwriting process include the following:

  • Your driving record
  • Your public records
  • Your Comprehensive Loss Underwriting Exchange (CLUE) report, a list of all claims you have filed
  • Your credit history
  • Medical records
  • Lab test results
  • Prescription drug histories
  • Phone interviews
  • Insurance exams

After the insurance company has your application and all of the underwriting requirements, they will make a decision on whether to offer coverage and at what premium. The more information the underwriter has, the more complete their understanding will be, and the more accurate their ability to properly price your risk will be.

Mortgage underwriting: Also uses a risk assessment process.  Many factors go into determining your interest rate and maximum loan size.


Annual Percentage Rate for Insurance Premiums

Find Your Optimal Insurance Deductible Calculator

What Is Underwriting and Why Is It Important To Me?

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Informative Links and services:

* The National Association of Insurance Commissioner's  Drivecheck tool helps you determine if usage-based auto insurance will save you money.