Authorization Definition
The Dictionary of Insurance Terms and Definitions
In insurance, "authorization" is a document which gives an insurance company permission to obtain personal information about an individual who is proposed for insurance coverage. When you submit a life insurance application, the insurer needs to research the background of the person(s) whom you propose to cover. Underwriters at the insurance company may require medical records, an attending physician's statement, or other documents in order to complete this task, but without the authorization of the proposed insured, doctors offices, credit bureaus, etc. will not release the necessary information to them.
Typically, the authorization document takes the shape of a form signed by the proposed insured. The insurance company will present the document of authorization to whichever office possesses the information it needs, and the office will release the information.
Information gathered by these means is used to assign each proposed insured to one of four rate classes or one of ten tables (which are essentially rate classes with a higher cost). This assignment determines, in large part, the cost of insurance for covering said individual. The underwriters at the life insurance company use a formula which includes the rate class, age, and sex of the proposed insured, as well as the value of the proposed policy, to determine the price an applicant will pay for life insurance.
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