Underwriting
Underwriting is the process an insurer uses to assess your application and decide whether to offer cover, as well as the terms and premium that will apply.
When you apply for insurance, the insurer needs to understand the level of risk they're being asked to insure. This assessment process is known as underwriting.
During underwriting, the insurer considers information such as your age, health, medical history, occupation, lifestyle and, depending on the type of insurance, your financial situation. They may also request additional information, such as a medical report from your doctor or the results of a health assessment.
Once the assessment is complete, the insurer will decide whether to accept your application and on what terms. In many cases, cover is accepted on standard terms. However, depending on the level of risk, the insurer may apply a loading (an additional premium), place an exclusion on a specific condition, or, in some circumstances, decline the application.
Every insurer has its own underwriting guidelines, so the outcome can vary between providers. This is one reason why working with an adviser can be valuable - they can help compare insurers and explain the options available if your application isn't accepted on standard terms.
Why It Matters
Underwriting helps ensure your insurance is tailored to your individual circumstances. Understanding the process can help you know what information is required and why different insurers may offer different outcomes.
Common Misunderstandings
"Underwriting is just about my medical history."
Not always. Insurers may also consider your occupation, lifestyle, hobbies and other factors depending on the type of insurance you're applying for.
"If one insurer declines me, every insurer will."
Not necessarily. Each insurer has different underwriting guidelines and may assess your application differently.
"A loading means I've been declined."
No. A loading means the insurer is prepared to offer cover but at a higher premium due to the level of risk.
"I should leave out information to improve my chances."
No. Providing complete and accurate information is essential. Failing to disclose relevant information could affect your policy or a future claim.
FAQs about Underwriting
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This depends on the type of insurance, but it may include your health, medical history, occupation, lifestyle and financial information.
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Not always. Some applications only require a health questionnaire, while others may require additional medical information.
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The timeframe varies depending on the insurer and whether additional information is required.
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Yes. An adviser can guide you through the process, help prepare your application and explain any underwriting decisions.
Underwriting is an important step in setting up the right insurance, but it doesn't have to be complicated. If you're applying for cover or have questions about an underwriting decision, talk to a New Vision Financial Services adviser. We'll guide you through the process and help you understand your options every step of the way.