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, you will need to complete an application form. Most comprehensive products will require you to complete a series of questions regarding your health and financial history. Insurance companies will also require information about your work and any sports and pastimes that you might participate in.
Medical underwriting is the process of assessing your medical history. For example; if you disclosed that you had a history of high blood pressure, the underwriter at the insurance company might request a report from your doctor. Requesting information from your doctor or any relevant medical professional cannot be done without your permission. All medical information gathered is strictly confidential and this is only viewed by those who have a direct role in assessing your application. Medical examinations are not always necessary, but when they are requested, it is only to help you.
Financial underwriting is more commonly used when applying for an income protection policy. The purpose of financial underwriting is to make sure that the cover amount which you apply for is appropriate for your financial situation. It makes sure you don't over insure yourself, and keeps your premiums down. As with medical underwriting, you can be sure that the information disclosed is completely 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 terms based on the risks. Underwriters are there to help you and they will not deny anyone cover unless it is necessary.
If a medical examination reveals an above average likelihood that you will make a claim, it's more likely that a loading or an exclusion will then apply then that your cover will be denied altogether.