Any time an insurance company offers you coverage, they’re taking on the risk of potentially paying out claims. The part of the underwriting process for any insurance policy is figuring out just how large that risk is and whether or not an insurance company will be able to take on the risk.
The same is true for life insurance. All life insurance companies have underwriting standards. You’ll need to meet those standards to be approved for life insurance.
To get the information needed to underwrite your risk level, you will be required to complete a life insurance application that will ask you multiple questions. You’ll need to provide information about your age, health, income, and more.
The insurance company will evaluate your information to see if they can offer you coverage and determine a rate for that coverage based on your overall risk.
However, the insurance company won’t just rely on the information that you submit on your application. They’ll verify it from several third-party sources.
For example, a large part of applying for life insurance is the medical exam. The medical exam is used to verify your medical history and provide insight into your current health through lab results.
While your overall health will play the largest part in your ability to qualify for coverage, other factors will be considered, such as your driving history, results of any prior insurance applications, any history of prescribed medications, and financial history.
The insurance company will utilize data collected about you from consumer reporting agencies to verify these additional underwriting factors. Consumer reporting agencies collect data on people that companies can use to make informed decisions to offer them products like insurance policies or loans.
One of the most well-known consumer reporting agencies that are used by multiple life insurance companies is a company called LexisNexis.
Many people are unfamiliar with LexisNexis, but their services play a large role in the life insurance application process. The information provided by LexisNexis can make a difference in how much you’ll pay for a life insurance policy and could even cause you to get denied.
Plus, with more and more companies offering accelerated underwriting, the data LexisNexis provides is becoming even more important.
Knowing what information LexisNexis reports and what life insurance companies do with that information can help you avoid any surprises after you apply.
What is LexisNexis?
LexisNexis is a company that specializes in advanced technology to process big data and provide advanced analytics to help companies manage their risk and eliminate potential fraud.
Since the 1970s, LexisNexis has provided their services to companies and organizations in over 180 different countries worldwide. The company employs a staff of approximately 8,700 employees with offices located throughout the world. LexisNexis processes over 270 million transactions at any given hour, helping companies take control of their risk management challenges.
Who uses LexisNexis services?
- Academic institutions
- Collection and recovery agencies
- Corporations and non-profits
- Banks and financial services
- Government
- Healthcare
- Insurance
- Law enforcement and public safety
- Law firms
- News & media organizations
A division called LexisNexis Risk Solutions provides consumer information specifically to insurance companies. Risk Solutions has also played a huge part in helping insurance companies speed up the underwriting and, in many cases, without having a medical exam.
The data allows for what is often referred to as accelerated underwriting. Accelerated underwriting means your application can be approved faster and with less input from you.
Rather than relying on a lengthy application medical exam, insurance companies can use LexisNexis to receive an overall insurance score that ranks an applicant’s overall risk to the insurance company, leading to a quick decision for coverage.
LexisNexis and Accelerated Underwriting
Until recently, it was standard for life insurance decisions to take a few weeks up to a month to complete. You would need to complete an application, take a medical exam, and wait on the company underwriters to provide a decision.
Today, LexisNexis allows companies to offer policies without the need for a long and involved process. The information LexisNexis provides means companies can often make a coverage decision without the need for a medical exam if it’s an option offered by the insurance company.
Instead, they can use LexisNexis’s information to get a complete picture of the applicant applying for coverage very quickly.
LexisNexis also helps companies detect errors like incorrect birthdays or social security numbers. Those sorts of errors could add days to the processing of a life insurance exam in the past.
Now, they can be resolved in minutes. Essentially, LexisNexis streamlines insurance underwriting, making no exam and other accelerated policies possible through running a simple report on an applicant.
What information is on a LexisNexis report?
| LexisNexis Report |
|---|
| Aircraft Certifications |
| Bankruptcies |
| Criminal History |
| Liens & Judgements |
| Lifestyle & Behavior |
| Professional Licenses |
| Public Records |
| Property Ownership |
LexisNexis Insurance Score
LexisNexis calculates an insurance score called a Risk Classifier. Your insurance score is a measure of risk and how likely you are to file an insurance claim based on multiple consumer data pieces.
People with higher scores are viewed as having a better life expectancy than people with lower scores. A LexisNexis insurance score can range from 200 to 997.
LexisNexis Insurance Score Vs. Credit Report Score
If you think that all sounds like a credit report, you’re right. LexisNexis is Risk Classifier is close to a credit report. Generally, when you think of credit reports, you’re probably thinking about your FICO or Vantage score.
Banks most often use your FICO score to determine if you qualify for credit cards, loans, and other products. It’s based on your past payment history and on any credit products you currently have.
You might be familiar with there are three large credit reporting bureaus:
- Transunion
- Equifax
- Experian
What you might not know is that you have as many as 49 different credit reports. These reports can be pulled when you apply for financial products, during an employment screening, and more. Some other major reports include:
| Credit Agency | Description |
|---|---|
| ChexSystems | Your ChexSystems report is pulled when you apply for a checking or savings account. It contains information on your past banking, like if you've ever bounced a check or left an account in overdraft. In some cases, the information in your ChexSystems report could cause a bank to deny you an account. |
| EmpInfo | Your EmpInfo report contains data on your employment and income. It might be pulled when you apply for a new job, apartment, or loan. |
| HireRight | HireRight is a background check report that potential employers can request. |
| CoreLogic Rental Property Solutions | Provides details if you've ever been evicted, it will show up on this report that landlords can request potential tenants. |
| SageStream | SageStream is a supplemental credit report. It provides banking information but also includes information about your history of paying your utility and other bills. |
LexisNexis is another major credit report. It has its own data sources and scoring methods. So, your insurance score is not the same as your credit score.
That’s because LexisNexis looks at additional information and weighs information differently than your credit report. However, a good credit score and a good insurance score often go hand-in-hand.
Your insurance score includes some of the same information that will show you on your FICO credit report. Major financial data that factors into your insurance score includes:
- Any bankruptcies
- Any liens
- Any current or past mortgages
- Any current late balances
- Any bills that were more than 90 days late
So, if you have a mortgage that you’ve made on-time payments for several years and have never been in bankruptcy, that will have a positive effect on your insurance score just like it would on your FICO credit score.
However, if you’ve been in bankruptcy or have a history of late mortgage payments, both your FICO credit and your insurance score will be lower.
Your LexisNexis insurance score also factors in information your FICO credit score doesn’t. This includes:
- Your criminal record
- Record of any property you own
- Any professional licensure you hold
- Any weapons license you hold
LexisNexis uses this information along with your financial information to generate an insure score.
Companies use this in their underwriting process. Just like banks will use your FICO score to determine if they can approve you for a loan and what interest rate to charge you, an insurance company will use your insurance score as part of determining whether they can approve you for a policy and what rate you qualify for.
| FICO Credit Score | LexisNexis Insurance Score |
|---|---|
| Ranges from 300 to 850 | Ranges from 200 to 997 |
| Is used for lending decisions | Is used for insurance decisions |
| Factors in recently missed payments | Factors in recently missed payments |
| Factors in your total debt | Factors in your total debt |
| Factors in payments more than 90 days late | Factors in payments more than 90 days late |
| Factors in information about your mortgage and other loans | Factors in information about your mortgage and other loans |
| Factors in any past liens or bankruptcy | Factors in any past liens or bankruptcy |
| Factors in your recent credit inquiries | Factors in your criminal history |
| Factors in your mix of types of credit | Factors in any professional licensure you hold |
| Factors in the age of your financial accounts | Factors in any weapons licensure you hold |
When the Information in your LexisNexis Report Leads to Denial
Your LexisNexis report is just one piece of the underwriting puzzle. As mentioned, life insurance companies look at various information before making a final underwriting decision.
However, your LexisNexis report could be the deciding factor.
There are a few instances where this might happen. The primary time your LexisNexis report could lead to denial is if you’ve recently declared bankruptcy. Many life insurance companies will not issue a policy to someone who has multiple bankruptcy filings or have declared bankruptcy in the past 24 months.
That means that this information on your LexisNexis report could cause an automatic denial.
Another time your LexisNexis report could lead to denial is when you’re being charged with a crime. Life insurance companies will be hesitant to offer you a policy if you’re actively charged with a felony, misdemeanor, or serving probation. The court and police reports will show up on your LexisNexis report and could lead to denial.
Similarly, if you’ve recently been released from jail, it could impact your ability to get a policy. Information about your sentence, including court and police records, will be on your report. It could lead to a denial.
However, keep in mind that generally applies to very recent charges and prison sentencing. If your time in jail were five or more years ago, it probably wouldn’t impact your chances of securing a policy as long as your not serving any current probation time.
Other Reports Used By Insurance Companies
Over 600 life insurance companies rely on LexisNexis’s data to help with a life insurance application’s approval process.
However, LexisNexis isn’t the only consumer reporting agency used by insurance companies.
A life insurance company and its underwriters will need to get as much information about your lifestyle and habits as they can to evaluate your potential risk and determine if they can issue a policy.
Additional information will often be pulled from some of the oldest reporting agencies in the U.S., many of which are used in conjunction with LexisNexis data.
Motor Vehicle Report - (MVR)
Car accidents are one of the leading causes of death in the United States. Life insurance underwriters assess your risk of death in an auto accident by looking at your overall driving record.
A history of accidents, speeding tickets, DUI/DWI, or other moving violations will raise your rates or lead to a decline if there multiple offenses.
Medical Information Bureau Report - (MIB)
The Medical Information Bureau, or MIB for short, collects and reports information about any past insurance applications for coverage that have been applied for. It will include whether your application was approved or denied and what information was found.
Life insurance companies use this information to look for inconsistencies and possible fraud. For example, if you were denied a policy in the past because of a health condition and did not mention it on your current application, your MIB would disclose this information to the underwriter.
Your MIB report is always pulled when you apply for life insurance and other forms of insurance.
Prescription Check - (Rx)
Controlled substances are medications that have a high potential for abuse and addiction. Prescription databases keep track of prescriptions for controlled substances and can be checked by life insurance companies.
This can give companies insight into your health and the medications you take, and when they were prescribed and last refilled. This won’t often make a big impact, so if you were prescribed codeine for a broken foot a few years ago, don’t worry.
However, multiple controlled substance prescriptions could flag to underwriters, especially if you didn’t mention them.
Attending Physicians Statement - (APS)
Insurance companies can often get the health information they need from your medical exam and the consumer data reports that are automatically pulled during the underwriting process.
However, it’s not uncommon when an insured has a medical condition history that requires more information about the condition. In this case, an insurance company might request your medical records, which are often referred to as an attending physician’s statement or APS for short.
Fair Credit Reporting Act Check - (FCRA)
A life insurance company will often do check your FICO credit score in addition to your LexisNexis insurance score.
Generally, insurance companies will perform what’s called “soft pull” of your credit.
A soft pull allows companies to check your credit without taking points off your credit score. You’ve likely had soft pulls in the past. For example, if you’ve ever used a pre-approval tool for a credit card or loan, you’ve had a soft pull of your credit.
How to Check Your Own LexisNexis Report
You can’t monitor your LexisNexis report like you might do with your FICO credit reports. However, you can check your own report. LexisNexis will provide a free report to you once a year if requested. You can get a copy of your LexisNexis report by completing any one of the three options:
- By calling LexisNexis at 866-897-8126
- By writing to LexisNexis at LexisNexis Consumer Center, Attn: Full File Disclosure, P.O. Box 105108, Atlanta, GA 30348-5108
- By filling out this online form
When you contact LexisNexis, you’ll need to verify your identity by providing your:
- Full name
- Social Security Number
- Date of birth
- Current address
If your life insurance application is denied, you can also request to see the information on your LexisNexis report that may have been the reasoning behind the decline. The Fair Credit Reporting Act requires the companies to inform you in writing if your credit score caused a denial.
This includes your insurance score. The letter will include your score and the reason codes. However, no one wants to receive a denial. It’s much better to get a copy of your LexisNexis report before you apply for life insurance.
Improving Your LexisNexis Report
The best way to improve your LexisNexis report is to improve the data it reports. One way to do this is to monitor your FICO credit score. While the scores aren’t the same, they do rely on a lot of the same information. If you notice your FICO score has dipped, your insurance score might have dipped also.
You can take steps to improve your FICO score such as:
- Pay all your bills on time every month
- Pay off any old debts that appear on your report
- Be careful applying for too much credit
- Keep your credit usage to under 30 percent of your available limit
Taking care of your FICO credit score will also help your insurance score. Plus, several services allow you to monitor your credit score. Many of these services even provide immediate updates if your credit report changes. You can use these services as a guide.
You can also keep an eye on anything that might show up in your criminal record. Be careful about things like minor citations and driving tickets. You might pay them off and forget about them, but they’ll show up on your LexisNexis report and could result in higher premiums.
LexisNexis and Life Insurance - Frequently Asked Questions
We’ve got you covered if you still have questions on LexisNexis. Read on for the answers to some common and advanced frequently asked questions.
Does LexisNexis provide other types of insurance scores?
LexisNexis also provides auto and homeowner’s insurance scores. The auto insurance score, known as a C.L.U.E score, includes information on the car you own and all the auto insurance policies you’ve had in the past seven years.
It will tell auto insurance companies about other policies you’ve had, the rate you qualified for, the claims you made, and the reason the policy was canceled. The homeowner’s insurance score includes information on your current address, such as your property’s value.
It also includes any past evictions or foreclosures.
Why do life insurance companies check credit?
Life insurance companies look beyond your health to assess your risk of dying. That includes your credit and financial matters. This might seem not very clear. After all, you could be in exceptional health but also be in debt.
However, your credit actually does have an impact. According to data studies in the life insurance industry, risky financial behavior and a higher risk of early death often go hand-in-hand.
This is true regardless of your age and overall wealth level. That’s why a lower credit score and lower insurance score indicate that someone is a high risk to insure.
Your risk of death isn’t the only reason life insurance companies check your credit. There’s also a simple reason. Life insurance is a contract that will require you to make a monthly payment. If you’ve had trouble making payments in the past, the life insurance company might consider it likely that you’ll have trouble paying your insurance premiums.
Does LexisNexis make underwriting faster?
Yes. LexisNexis allows companies to get the information they need for underwriting much faster. Before LexisNexis, companies needed to pull multiple reports from multiple sources and wait for the results. Plus, companies had to pay for each one of these results.
LexisNexis streamlines the process. It also gives much more detailed information than companies were able to get in the past. This allows them to decide on offering your coverage quickly.
Why can't insurance companies just use the information on your application?
Insurance companies are required to verify the information you provide to prevent fraud. It might seem like a lot of information asked for on the application and the medical exam for the insurance company to verify it with reports, but it’s necessary.
Life insurance benefits are large amounts of money, ranging from $100,000 to several million dollars. Life insurance companies need to pay out that money to a beneficiary if a policyholder dies, so they need to make sure they have a complete and accurate picture of every applicant.
How much impact does credit have on my rate classification?
It depends on the company. For some companies, your credit score will only play a minor role or even no role at all. However, other companies will weigh it a lot more heavily. A poor credit score could bump you into a more expensive rate classification or lead to a potential decline in these cases.
How do I know if a company will check my LexisNexis report?
If you see the language on an insurance application that states they will check your “consumer report,” you can assume they’ll pull your LexisNexis report. LexisNexis is the primary insurance report and score used by life insurance companies.
Banks and other lenders might also use your LexisNexis risk score before they offer you a credit product. LexisNexis doesn’t reveal which companies use their reports, but most do.
Companies that don’t pull LexisNexis or any other credit data include:
- Fidelity Life Association
- Foresters
- Mutual of Omaha
- Nassau
Can I dispute my LexisNexis report?
Yes. Just like the information on your FICO credit report can be incorrect, the information on your LexisNexis report isn’t always accurate. That’s why it’s a good idea to order a free copy of your report before you apply for life insurance.
You can look over your LexisNexis report and dispute any information that is found to be inaccurate. LexisNexis will investigate your claim. If they find the information was incorrect, it will be removed from your report.
Does life insurance affect my credit score?
No. Having a life insurance policy won’t affect your credit score. Your policy payments won’t be recorded as part of your credit report. Your credit also won’t be affected if you’re no longer able to pay your premiums. The company will cancel your policy, but it won’t report anything to credit agencies.
Does a low insurance score mean I can't get a life insurance policy?
No. If you’re worried about your LexisNexis report, an agent or broker can help you find a policy. Agents and brokers have experience helping people in challenging situations to find coverage.
For example, if you’ve had a recent bankruptcy, an agent can help you find a company that works with people who have bankruptcies.
LexisNexis - Final Thoughts
It can be tempting to leave information out of your life insurance application. You might be hoping that you can secure a lower rate by not mentioning a health condition, financial concern, or criminal conviction.
This is never a good idea.
Life insurance companies check for fraud by pulling multiple reports, including your LexisNexis report. They’ll likely find any information you didn’t share on your application. This could result in a denial of your application.
It’s a much better idea to order a copy of your LexisNexis report.
You can use the report to see exactly what the insurance company will see when you apply. You can dispute any errors you find.
Additionally, if there is information on your LexisNexis report that you’re worried might prevent you from getting a policy, you can contact an insurance agent or broker.
You can let the agent know what your concerns are, and they can help match you with a policy. If you’re ready to start looking for policies, we’re here to help.
Contact us at No Medical Exam Quotes today.
