Why You Need Your Social Security Number for Life Insurance

Social security number for life insurance

Why You Need Your Social Security Number for Life Insurance

Life insurance providers typically require prospective policyholders to provide their social security numbers (SSNs) and other personal details for various reasons. However, since cases of identity theft have surged in the recent past, you should be vigilant about giving out your SSN. Before you give out your SSN to an insurance company, you should find out whether the company is HIPAA compliant because HIPAA compliant companies have a legal obligation to protect customers’ data.

Keeping this in mind, here are some of the reasons why your social security number is required for life insurance.

Identity Verification

Before insuring you, an insurer will typically want to confirm that you’re indeed the one applying for coverage. To this end, the insurer may ask for your Social Security Number or any other official identification document such as your visa, green card, or tax identification number. These documents help insurers fight insurance fraud. Remember, the insurance company has no legal obligation to insure you, and therefore, failure to provide your SSN may result in denial of coverage.

To Determine Your Health Class

The cost of life insurance coverage largely depends on your health class. This is simply an insurance rating classification based on your medical history as well as the results of your medical exam. To establish your health class, the insurance company may need to access your prescription drug or medication database using your Social Security Number. By doing this, the insurer will be able to define the risk involved and calculate the cost of your policy.

For Financial Underwriting

Insurance companies conduct financial underwriting to determine your ability to pay your life insurance premiums throughout the policy period. Your credit report is an important resource in financial underwriting. In general, the insurance company requires your Social Security Number to check your credit report. While a bad credit score is unlikely to affect your eligibility for life insurance coverage, high-risk factors like recent bankruptcy cases may cause the insurer to deny you coverage.

To Check for Criminal Records

If you have a criminal record, insurers will likely place you in the “high risk” category. Therefore, before offering you coverage, an insurer will likely run a background check on you. Using your SSN, the insurer can access and review your criminal history.

To Check Your Insurance Application History

A life insurance company can use your Social Security Number to access your information in the Medical Information Bureau (MIB) database. The MIB is a non-profit agency that collects and stores people’s medical and non-medical information to help prevent fraud in the insurance industry. If you’ve ever applied for life insurance before, your details are likely in the MIB database. Therefore, if your past applications were denied, the insurance company may consider you high-risk and deny you coverage as well.

What Happens If You Refuse to Provide Your Social Security Number?

It is worth noting that your Social Security Number is crucial in the life insurance underwriting process. Without it, the insurance company may not be able to do much, let alone confirm your identity. If you don’t provide your SSN, the insurance company will likely deny you coverage unless they accept alternative forms of identification.

A life insurance company may require your Social Security Number to, among other things, confirm your identity, access your medical, criminal, credit, and insurance application records. If you have any questions regarding life insurance, talk to the experts at Club Agency Insurance Brokerage today. We are ready to help you with all your coverage needs.



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