What you need to know about inspection reports

By Michaela Strawser

Crump Life Insurance Services

Inspection reports are typically required on cases with higher face amounts, or for older individuals. Most inspection reports are handled by a third-party company contracted with the life insurance carrier. For more moderate face amount cases, the carrier may actually have its own staff do a phone interview with you. Sometimes, these are called personal history investigations, or PHIs.

The process

Once the application is set up at the carrier, the inspection report company is triggered to contact you using the phone number listed on the application. The phone interview takes approximately 10 to 20 minutes. In rare instances, at the largest face amounts or in the older ages, an actual face-to-face interview may be required. Individuals who are 70 or above may also be required to complete cognitive testing as part of their inspection report. Below is some of the information the inspector will be looking for:

Health questions — Names of all physicians, dates, and reasons for last visits. Any surgeries, medications, and height and weight will also be asked.

Financial questions — Income, assets, net worth. Mainly, this is to verify information on the application and any financial documents that are submitted. You can refer the inspector to an accountant or CFO if needed. At the higher face amounts, you will be required to provide a CPA, attorney or accountant’s contact information to conduct a third-party verification of finances.

Business questions — In the case of buy-sell or key person insurance, the inspector will ask business-related questions as well as business financial questions. He/she will also ask about the history of the business, number of employees, how long in business, etc. Oftentimes, the inspector will wish to speak to the CFO or accountant to verify the financial information. Some carriers refer to this as a business beneficiary inspection report.

Personal questions — Employment history, foreign travel, hazardous activities, tobacco use, alcohol use, past history of drug use and driving record. The inspector will also ask about past insurance applications and the purpose of the new coverage.

Important notes about inspection reports

• The inspection company has limited access to the information on your life insurance application. It is essential that all questions are answered completely and honestly.


• Information gathered during an inspection report is confidential and not released to your insurance agent — it is sent directly from the vendor to the carrier.


• A well-done inspection report is a true asset to any underwriter. Concerns will arise if the report conflicts with what is in the APS records or on the application.