What is Underwriting?
Underwriting refers to the process that insurance companies use to assess the eligibility of a customer to receive their products.
There are different types of underwriting. The two that mainly concern life insurance are medical underwriting and financial underwriting. When applying for life insurance products, the life insured will need to complete an application form. Most comprehensive products will require the customer to complete a series of questions regarding their health and financial history. Insurance companies will also require information in regards to the applicant’s occupation and any sports and pastimes that they might participate in.
Medical underwriting is the process of assessing the applicant’s medical history. For example; if the applicant zdisclosed that they have a history of high blood pressure, the underwriter at the insurance company might request a report from the applicant’s doctor. Requesting information from the client’s doctor or any relevant medical professional cannot be done without the permission of the applicant. All medical information gathered is strictly confidential and this is only viewed by the individuals who have a direct role in assessing the life insured’s application.
Financial underwriting is more commonly used when applying for an income protection policy. The purpose of financial underwritings is to make sure that the cover amount which the customer has applied for reflects their financial situation. This is to avoid people over insuring themselves. As with medical underwriting, the information that is disclosed on an application is confidential.
Once all the information required has been gathered and the underwriters at the insurance company have made their assessment the applicant will receive notification of the assessment which will include the outcome.
It’s a common misconception that underwriters are in the business of denying cover for people. It’s the underwriter’s job to assess a person’s situation and then offer the most appropriate cover. Underwriter’s are there to help you, they will not deny anyone cover unless it is warranted.