As life insurance experts with years of experience in the Irish market, we have helped individuals from all walks of life get the right life insurance cover for their needs.
However, as diverse as our clientele are, almost all have something in common. When researching insurance policies, most people need clarification about the amount of insurance jargon they are confronted with. Mystifying terms like premiums, deductions, provider networks and beneficiaries can make insurance terms and conditions policies nearly impenetrable. One of the significant terms clients need help with is the concept of underwriting. No matter what type of life insurance policy a person avails of, they will likely encounter the term: Underwriter. In this blog, we're going to discuss what underwriting is and explain how it relates to a life insurance policy.
What does underwriting mean?
In the simplest terms, underwriting relates to the factors determining whether a person receives life insurance and calculates how much an individual pays. These factors can include age, employment and, of course, health. By calculating the above – and a myriad of other risk factors, the underwriting process determines if an individual is eligible for life insurance.
What the life insurance underwriting process looks like
Every insurance company has underwriters that assess every life insurance application they receive. The underwriters will calculate the amount paid on insurance premiums based on the submitted information. If the application is relatively straightforward, the applicant will likely be awarded life insurance immediately. However, in more complex cases, such as a pre-existing condition, the underwriters may request additional medical information to allow them to make an informed decision. The medical information requested could be anything from a medical report to completing a questionnaire. After an underwriter completes their assessment, their decision can include:
Acceptance at the standard life insurance price
Cover with specific terms
Postponing the awarding of cover
Rejecting the application
Accepted, postponed or declined
If a life insurance application is accepted, the individual will begin paying their life insurance premiums at the standard price. The underwriter may approve life insurance based on specific terms. These special terms are usually expressed as loading or an exclusion.
A loading means the individual will pay more for life insurance than the standard rate
An exclusion means the individual can't claim for specific conditions
Finally, a postponement means the insurer may want to delay awarding life insurance. This postponement is not an outright refusal, and the applicant may reapply if certain conditions change; for example, the claimant may reapply if they lose excess weight or bring blood sugar levels under control. Alternatively, an insurer may want to wait to see how treatment or medications are working before insuring a person.
Every insurance company uses their own underwriters. Therefore if you're refused life insurance by one company, you still may find coverage elsewhere. For this very reason, it's vital to hire a life insurance broker like Citywide Financial. Our brokers help with the application process and match an individual with the right insurer and insurance policy. Please get in touch with our offices today to organise a consultation with a team member.