Financial Underwriting

• The process of medical underwriting is well known for health and life insurance policies. But insurers also do financial underwriting. Because life insurance is meant to replace your current and future income potential, it is important to determine that the amount of insurance you apply for matches your current financial situation. If the amount of insurance on the application falls too far outside the expectation based on your annual income or net worth, your application could be denied. Your bank statements can help an insurer financially underwrite you.
  
  

Insurable Interest

• Life insurance is not meant to provide an extravagant lifestyle for the people you leave behind. If it did, your beneficiaries might value the benefit of the policy more than your life. An insurance company must ensure that your beneficiaries have an insurable interest in your life, meaning that the benefit of your death does not outweigh the value of your life. Verifying an insurable interest is part of the purpose of financial underwriting.
  
  

Multiples of Income

• To ensure they are not insuring you for more than your insurable interest, insurance companies multiply your annual income by a certain rate, typically 12 to 15 times, according to eTermLifeInsurance.com, to determine the maximum amount of insurance you can buy. In other words, if you earn $50,000 a year, you could probably be insured for up to $750,000, but an amount over this would seem excessive to a life insurance underwriter. Your bank statements for the account into which you receive a paycheck can help verify your annual income.
  
  

Lost Wages

• An insurer might request your bank statements during a claim as well. If you are requesting compensation for lost wages due to an injury, or lost income for your business after a fire or other loss, the insurer might request statements from your personal or business accounts to determine your normal income level and the amount it has dropped as a result of the loss. Without this data, you may not be able to substantiate your claim and it might be denied.