Depending on the sum insured and type of policy you take, your insurer will either require simplified underwriting (only questions, no medicals) or full underwriting (questions and medicals).
Simplified underwriting involves nothing more than answering a series of health and lifestyle questions with no medical tests.
”We describe underwriting as the process of collecting health and lifestyle information about a potential customer. This information is used to create an individual risk profile; the risk profile then determines the premium charged for the selected amount of cover,” says Thembisa Mapukata, General Manager: Tied Sales Distribution at Old Mutual Mass and Foundation Cluster
Medical underwriting for low-value life policies usually involves a simple blood test, whereas policies sold to older customers or for high policy cover amounts might require more detailed tests and a comprehensive health check by your doctor or one appointed by the insurer, Mapukata explains.
Depending on the sum insured and the type of policy you take, your insurer will either require simplified underwriting (only questions, no medicals) or full underwriting (questions and medicals). Simplified underwriting involves nothing more than answering a series of health and lifestyle questions with no medical tests. Full underwriting, meanwhile, involves a full medical examination and a questionnaire that must be answered honestly and accurately by a doctor.
Medical underwriter Wandile Gugwana explains the misconception behind life policies. “Life insurance is not to enrich but a safety net. life insurance is not to enrich those left behind; in reality, it is simply something put in place to make sure that everything you own is taken care of when you pass away.”
Can you apply for life insurance if you have health conditions like diabetes and hypertension? These are some of the illnesses that are considered high risks because, even when someone is receiving treatment, there are cases where they put their medication in the cabinet once they feel better. As a result, your risk profile is higher when you take certain health risks into account.
Depending on the specific type of life insurance you’re applying for, there are different medical underwriting processes that one must go through: full underwriting, simplified underwriting, or no medical underwriting.
Medical examinations and checks are conducted to ensure that we cover anyone according to their risk profile, clarifies Gugwana.
No underwriting indicates that you are applying for low-value insurance, which only asks for the bare minimum: “Can you afford what you want?” Then, a more simplified underwriting inquiry: Is what you state on paper consistent with your lifestyle? There is a medical questionnaire that asks about issues we are unsure of, such as how often you smoke each day, and will apply smoker rates based on your response.
Full underwriting applies to everything, and it may take up to a month to provide your coverage; it is very thorough, and the verification process is concise. “We can even have the doctor check to see if your vision is up to par.” Full underwriting is typically associated with high covers, says Gugwana.
“Certain medicals are covered, but you must pay for your medical clearance. Actually, systems are designed in such a way that whatever you say is automatically rated. So, if we have an applicant who weighs 98 kgs, has a BMI of 33, and claims not to have hypertension, the system cannot rate them; it is then that these minor discrepancies are resolved through medical clearance.”
Gugwana maintains that medical tests are always going to cost you, whether or not your insurer told you to get them; if you go to a doctor, you’re going to pay! Full underwriting results in lower premiums; simplified underwriting or no underwriting results in higher premiums because we don’t know everything about you, and we are taking a risk. It’s based on assumption. “Full underwriting protects the company from a massive loss and you from paying higher premiums than you should.”
The medical checks and tests that your insurer might ask you to go for when buying a life insurance policy are nothing to be afraid of. These tests, also called ‘full underwriting’ or ‘medical underwriting’, are standard requirements at most life insurance companies and are aimed at protecting you.
There are three reasons why you might be concerned about going for full underwriting:
The first possibility is that you will learn something negative about your health. This concern is easily addressed because it is absolutely essential to be aware of serious medical conditions as soon as possible, allowing you to seek the necessary medical treatment to help you live a long and healthy life.
The second worry is that you might not be able to get the life insurance policy if the whole underwriting process reveals a condition. While this is a possibility, it’s vital to understand that receiving life insurance does not always have to be impossible due to a medical problem that was discovered during underwriting. In order to account for the higher risk associated with your condition, the insurer may still provide you coverage that has some conditions excluded or charge you a higher premium.
“You must remember that hiding a medical condition from your insurer, or lying about it when you fill in the questionnaire, will almost certainly result in your future claim being rejected,” warns Mapukata.
The final worry is that if you choose to fully underwrite, your privacy will be jeopardised. Nobody wants a complete stranger to find out about their medical problems, after all. This worry is perhaps the simplest of the three to put to rest because all medical underwriting processes and regulations are carried out with the utmost respect for your privacy.
The good news is that your premium will be accurately calculated based on your unique risk profile once you have completed full underwriting. However, if you don’t conduct underwriting, the insurer will make all kinds of assumptions about your risk profile, and you could end up paying significantly more, even for a medical condition that you don’t have (and don’t need coverage for).
Making a list of the pros and cons is one of the best ways to make a difficult decision. So, the benefits of full underwriting include learning about potential health conditions early on, being charged a premium that accurately reflects your risk profile, receiving the maximum coverage for your policy, and providing much-needed financial security for your family.
And the cons? Worst case, some conditions might be excluded from your policy, or your monthly premium will be higher; but these options are far better than having your claim denied.
If you complete this simple ‘pros versus cons’ exercise, then you will not hesitate to go the full underwriting route.
“Deciding to undergo the full underwriting process could turn out to be one of the best decisions you make; you not only get more value from your cover but also ensure that you protect your family’s financial future and leave a legacy,” concludes Mapukata.
*This article does not constitute financial advice. Old Mutual Life Assurance Company (SA) Limited is a licensed FSP and life insurer.*
