Underwriting-(un'der-rit-ing) verb-To assume financial responsibility for (The American Heritage Dictionary of the English Language)

Well, you have done your homework and you have selected the company and the plan you want for your health or life insurance. You have completed the application and submitted the first month's premium. Now, all you have to do is wait for your policy to come in … right?

Not so fast! You still have to pass underwriting. Insurance underwriting for health or life insurance is really nothing more than defining the precise type of risk that the company is willing to accept, and determining whether or not you meet that definition.

You see, every policy we purchase is a request for the insurance company to accept the risk of loss for us.

Every company has its own definition of what is an acceptable risk. What may be an unacceptable risk for one company may be a perfectly acceptable risk for another, thus another reason to use an independent agent to do your insurance shopping for you.

I get calls on a daily basis from fellow agents that have only one company for health insurance and are unable to get coverage for their client due to the fact that they do not meet the underwriting requirements of their company. Many times the problem is as simple as the applicant is too short for their weight.

Health and life insurance can be difficult to qualify for, not everyone can qualify for coverage. You do not have a right to be issued a policy, and an insurance company does not have an obligation to issue a policy.

I cannot stress enough how important it is to have your insurance house in order. The person that says to me “I do not need health insurance, I am as healthy as a horse” is just playing with fire. Every person that is diagnosed with cancer on Wednesday was as “healthy as a horse” on Monday — they just are not insurable anymore.

You might say to yourself that this is all so unfair; people deserve to have insurance coverage. People also deserve to be insured by a company that can pay it's claims. They will not be able to pay their claims for long if they insure any and all risks. They must be selective and choose the risks they are willing and financially capable of taking.

By shopping the marketplace a good agent can help you find a policy if you have underwriting issues. For example: I have a life company that considers a person that chews tobacco or smokes a pipe as a non-smoker. Other companies will consider a previous cancer or heart attack after just five years, while other companies will want 10 years treatment free before they would consider that same risk.

Let me make my point clear. Do not wait until you are an underwriting risk to get your insurance house in order. Just because a doctor has declared you to be in excellent health does not mean you can qualify for an insurance policy. I know of some very healthy people that are uninsurable due to previous medical history.

Life and health insurance is the very foundation of a sound financial plan. If you do not have your health and life insurance in order, you are not even remotely ready to begin investing for retirement.

A plan that does not include adequate savings, along with appropriate life and health insurance is like a house built of cards-it will eventually fall.

George Harris Jr. is a 20- year veteran of the insurance and investment industry. He is a licensed insurance agent and a registered representative, offering securities through Avalon Investment and Securities Group, Inc., Muscle Shoals, AL, Member FINRA-SIPC. If you have questions or comments, or have a topic you would like him to cover, he may be reached at his Gulf Shores office at 251-968-1234 or via email at george@georgeharrisfinancial.com