The Makeup of a Health Insurance Policy - Underwriting Methods

One of the ways in which a policy can be tailored is the method of underwriting. Underwriting describes the way in which the policy is set up.?

Insurance underwriters establish pricing for accepted insurable risks.?The term underwriting means receiving remuneration for the willingness to pay a potential risk.

These are the primary methods of underwriting. As each method poses a different risk to the insurer, the choice of underwriting may also affect the premium. This is certainly the case when choosing MHD (Medical History Disregarded). This is because the insurer is aware they are more vulnerable to paying claims for pre-existing conditions.?

Underwriting Methods?

1. Moratorium?

The client will not have to fill in a health questionnaire when applying for cover and the medical underwriting is done at the point of the claims. Different insurers may have slightly different Moratorium wording.?

The insurer excludes any conditions for which you have received medication, advice or treatment or for which you have experienced symptoms. This applies whether the condition has been diagnosed or not in the five years before the start of your cover (pre-existing conditions). Related conditions (those medically considered to be associated with a pre-existing condition) will also not be covered.?

However, if you have not had any such symptoms, treatment, medication or advice for pre-existing conditions or any related conditions for a continuous period of two years after the start date of your policy, the condition will become eligible for cover. This period is known as the Moratorium. Though the two-year moratorium is most common, some insurers offer other lengths of moratorium.?

2. Continued Moratorium (when moving from an existing Moratorium policy)?

The moratorium underwriting term of your current insurer will apply and the start date of the moratorium underwriting does not start again.?

Please note that the benefits and terms and conditions of your new policy will apply and it is only the dates of underwriting with your current insurer that will be matched. There must be no break in insurance cover since underwriting.?

A switch declaration will also need to be completed to facilitate the transfer. These are questions and criteria that need to be satisfied and allow the new insurer to assess your eligibility to access this method of underwriting.

If the eligibility for transfer is not met, the insurer may refuse to offer cover on this form of underwriting.?

3. Full Medical Underwriting (FMU)?

A health questionnaire is completed on the application form. After reviewing the employee’s completed questionnaire, the insurer will let them know at the outset the basis on which they can offer cover. They will list any pre-existing conditions they may have that would not be covered on the policy.?

If necessary, they may ask the member’s doctor for further information. It is important that joiners list full and accurate information. It is important to focus on answering the questions accurately and completely to make sure that the policy provides valid cover.?

4. CPME: Continued Personal Medical Exclusions (Switch)?

Plans include continuous cover for pre-existing conditions and are as shown on your current insurer’s medical certificate. Exclusions shown on the current certificate will be continued (subject to the terms and conditions of the policy itself).?

As clients have had prior medical insurance he/she will be covered on CPME (Switch) terms. Exclusions may be applied if there are any declarations made when answering the switch questions. A copy of the current certificate(s) will be required with the application.?

5. Medical History Disregarded (MHD)?

This method of underwriting allows for pre-existing conditions to be covered without medical exclusions but is still subject to the terms and conditions of the policy.?

There is a minimum membership number required to set an MHD scheme up and it usually costs more than the above methods of underwriting.?