Almost all life insurance companies require social security numbers for the insured and beneficiaries for multiple reasons. Auto and Home Insurance companies though do not necessarily require it. For foreign nationals that do not have a social security number sometimes an ITN number will suffice.
One of the more common questions that insurance agents get is: Why do Insurance companies Need my social security number? Consumers are smart to ask this intelligent question, given how many social security number thefts there are.
The good news on this front is that more and more Auto and Home insurers are not requiring social security numbers and are instead relying on drivers license numbers. This makes good sense since most auto insurance requires a drivers license. However the rules and regulations for auto and home insurers vary by state. Some states have more strict guidelines about the use of social security numbers in determining insurance quotes.
The unfortunate news for life insurance and annuities is that just about every life insurance company in the United States (save perhaps one) requires social security numbers. Until such time that a national identification number is established I do not image this changing.
Quick Navigation"The Social Security number was created in 1936 for the sole purpose of tracking the earnings histories of U.S. workers, for use in determining Social Security benefit entitlement and computing benefit levels. Today the SSN may be the most commonly used numbering system in the United States. "
Believe it or not you will need more than just the insured's social security number. In general you will need to know the beneficiaries as well. This is for their protection to assist them in getting any potential death benefit. If you do not have a social security number on file for your beneficiaries you may risk a legal proceeding or a delayed payment. From an insurers perspective having social security numbers when they pay money out allows them to file all of their important paperwork with the IRS.
There is also another reason for this. If the beneficiary is not a US Citizen there is a complex process that must be followed if the proposed beneficiary is to get their money. Having a valid social security number confirms with the insurer that you are a US Citizen.
Life Insurance companies will require social security numbers for multiple parties involved. They require it for several reasons, some of which are more obvious than others.
Preventing Fraud is a cornerstone for the insurance industry. Believe it or not, fraud does exist in all forms of insurance and using social security numbers, can help prevent this. Since we have no national identification number your SS number is one of the few ways to confirm that you are not applying for insurance fraudulently.
Closely associated with preventing fraud is confirming your identity. Insurers believe that the knowledge of a social security number is an indication that you are who you claim to be. This is not of course iron clad.
The MIB group checks your record of insurance applications. This is somewhat tied in with fraud and assists insurers in flagging certain individuals that seem to have a lot of open applications. This helps lower insurer costs.
Insurers issue less expensive life insurance for those that are healthier. In your insurance application process you will need to confirm with the carrier which prescriptions you take and which ones you have taken. The prescription drug database will be able to independently confirm this. This also assists insurers in lowering overall rates.
Depending on the state in which you live in, certain carriers will check on your history of bankruptcies. There are numerous new states laws/regulations though that are changing this.
