How health insurance underwriting affects your premium&cover

When you take out your private medical insurance policy, you will be given a choice as to the kind of underwriting on which your policy will be based. The underwriting you choose will influence which conditions you will be able to claim for later, and the amount of medical information you need to give your insurer before taking out the policy. Some types of underwriting are more comprehensive than others, and this will have implications on the price of the policy.

What does your underwriting do?

Underwriting is the way your insurance company assesses your risk and sets your premium. It’s designed to encourage low risk applicants to take out a policy, whilst dissuading high risk applicants with hefty premiums. It also allows insurers to exclude conditions which the applicant has suffered from previously. This ensures the insurance company avoids exposure to any unnecessary risks, keeping individual premiums as low as possible.

When assessing your degree of risk, insurance companies will generally consider the following factors:

  • Age – As we get older our risk of suffering from illness increases, meaning insurers charge more for our premiums. Although the Equality Act 2010 has banned unjustifiable age discrimination in the insurance industry, insurers can provide reliable scientific sources that show risk increases with age. This means the practice of using age in insurance pricing will continue in the future.

  • Medical Conditions – On medically underwritten insurance your insurer will look at your medical history to decide whether particular conditions should be excluded from your cover. For example if you have diabetes, any illnesses related to diabetes may be excluded from your policy.

  • Injuries – If you’ve suffered from injury in the past such as a broken leg, conditions related to this leg could be excluded from cover in the future.

  • Medications – If you take regular medications your insurer can look at this under some kinds of underwriting, and add exclusions to your policy.

Types of underwriting available

  • Medical History Disregarded (MHD) – This is the best kind of underwriting you can get as it completely ignores all your previous medical history. No conditions will be excluded from your policy. However, medically history disregarded underwriting is only available on company schemes or when you transfer from a company scheme to an individual policy. It is the most expensive kind of underwriting available.

  • Fully Medically Underwritten (FMU) – When applying for a fully medically underwritten policy there is an extensive form to fill in with details of your medical history. The conditions declared on this form will be assessed and can be excluded from your policy. Generally the more medical history you have, the higher your premiums will be as there is an increased likelihood of you needing to use the policy in the future.

  • Moratorium (Mori) – This is the cheapest kind of medical insurance, it’s also the most convenient as there are no lengthy forms to fill in before taking out the policy. However, in order to be covered for any condition or symptom you have suffered in the 5 years prior to the policy, you will need to go a 2 year clear period from the policy start date without any advice, medication or treatment. When you call to make a claim on a moratorium policy, insurers will often send a claim form out to check your medical history with your GP. This can slow down the claims process, and while your insurer gets the information they require, if you proceed with treatment it will be at your own financial risk.

  • Continued Medical Exclusions (CME) – When you’ve had fully medically underwritten insurance for over 5 years, if you transfer cover from one insurer to another, any existing exclusions will be carried forward to your new policy, without any new exclusions being applicable.

More information on each of the above kinds of underwriting can be found in their own dedicated sections (the links above).

Why is choosing the right underwriting important?

  • Pre-existing conditions could be excluded – If you’ve suffered from a medical condition in the past, with a fully medically underwritten policy it could be excluded completely. However, if you’ve not had any problems with this condition for over 5 years it could be covered under a moratorium policy, so consider which would suit you best.

  • Cost of the policy – Medical history disregarded and fully medically underwritten policies, are a lot more expensive than moratoriums.

  • Complexity – Some policies can be more difficult to understand than others. With a fully medically underwritten policy you can claim for anything that’s not excluded, but working out what you can claim for under a moratorium can be much more tricky.

  • Ease of claiming – With moratorium policies when you claim your insurer will often need you to fill in a claim form from your GP, which takes time and complicates the process.

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