One thing underpins all health insurance policies – underwriting.
In this blog, we go through all the different types of underwriting, including ones for people looking to switch insurers, what to expect and how all of this relates to any pre-existing health conditions you might have.
Table of Contents
What is underwriting?
Underwriting, or medical underwriting, is a term that explains how your medical information is used to evaluate a private health insurance application. It helps the insurer to identify pre-existing medical conditions, decide whether to accept the application, at what premium rate and with what limits on benefits.
There are several different types of underwriting which we’ll explain below. Their suitability to you depends on if you are: new to health insurance, switching from another insurer, have any pre-existing conditions or what type of policy you will have.
Moratorium Underwriting
Moratorium underwriting is one of the most common methods of underwriting. It doesn’t require you to fill out a questionnaire or form when you apply. As a result, the application process is usually quick and accepted automatically.
With this type of underwriting, all medical conditions you’ve suffered in the past few years (usually 5 years) are automatically excluded. This means any condition, injury, or illness that you have experienced symptoms, had advice or received treatment for. Related conditions will also not be covered, though the definition of this varies between insurers.
As a result, the medical underwriting is done at the point of claim, so you will be required to share relevant information about your medical history when you make a claim.
After a period, known as the moratorium, which is usually 2 years, the pre-existing condition may be covered as well – providing you have not had any advice, treatment, medication, or symptoms within these two years.
Any pre-existing medical condition which requires regular treatment/advice or could be considered chronic will never be covered. This is because you are unlikely to have an unbroken two-year period without a recurrence of your symptoms.
Rolling vs Fixed Moratorium Underwriting
Rolling moratorium underwriting is the method described above: any condition experienced within 5 years of the policy start date will be considered for cover after 2 years on the policy ONLY if there has been no symptoms, treatment, medication, or advice for the condition.
A fixed moratorium is more lenient, though it is rarely used these days. It also will not treat any pre-existing condition within the first two years of the policy, but after that it will consider covering these conditions even if you have had symptoms, medication, treatment, or advice.
Continued Moratorium (Switch)
Another type of moratorium underwriting is the continued moratorium – sometimes called switch. This is available to those who are switching health insurance providers but whose original policy had moratorium underwriting. It allows you to continue your existing underwriting and potentially carry cover across for the same conditions.
Please note that the benefits and terms and conditions of your new policy will apply. With switch terms, the only thing guaranteed to carry over is the dates of underwriting – so be sure to check everything else carefully.
There can’t be any break in insurance cover since the underwriting. You must also complete a switch declaration comprising of questions and criteria that the new insurer uses to assess your eligibility for the transfer. If these criteria are not met, the insurer may not offer this type of underwriting.
Full Medical Underwriting (FMU)
With full medical underwriting, you must complete a health questionnaire on the application form that discloses your entire medical history. The insurer reviews the completed questionnaire and lets you know upon what basis they can offer you cover.
They will also list any pre-existing conditions that would not be covered on your policy, known as the list of exclusions. They may contact your doctor for more information on these conditions. There will often be a complete exclusion of any medical condition that you’ve suffered from in the past, regardless of how long ago it was.
Though this is usually permanent, you can apply to get it lifted later, with supporting medical evidence. You might be able to negotiate with your insurer for more minor conditions, especially if they occurred several years ago.
It is vital that the medical questionnaire is completed as accurately as possible to ensure that the policy provides valid cover. If in doubt, it is better to mention it, even if you don’t think it’s important.
The process can be a little more time-consuming than the moratorium as your questionnaire will need to be reviewed by the insurer before your policy can start. However, it is a much more black and white process, and you know explicitly what is covered from the beginning.
What will I get asked when applying for health insurance?
Completing the health questionnaire to send with your application for full medical underwriting is very important. Though it might seem invasive, the insurance company wants to ensure that they know as much about you as possible so they can evaluate the risk of insuring you. It is important to fill out the questionnaire as accurately as you can because it forms part of a declaration and agreement between you and the insurance company. Some of the most common things you will be asked to disclose are:- Your previous and current medical history. This usually includes things like dates of previous treatments, medications, symptom frequency, ongoing consultations, and diagnostic tests
- Weight and height. These measurements are used to determine your BMI – those that fall above or below the “ideal” BMI can often expect an increase in their rates.
- Inherited conditions/Family medical history. This can help the insurance company determine your risk for similar conditions, such as heart disease.
- Lifestyle factors. Regular or heavy smoking, drug use or heavy alcohol consumption will increase the future risk of liver or lung disease, so the premium you pay will increase appropriately.
- Certain jobs put their employees at a higher risk of specific illnesses or conditions that can increase the cost of critical illness medical plans and/or life insurance.
Continued Personal Medical Exclusions (CPME) - Switch
If you want to change your current health insurer, you will usually be offered the option to switch on a continued personal medical exclusion basis. This is for people who already have a fully underwritten health insurance policy with another insurer.
This often means that the insurer you switch to will retain the existing underwriting you hold and will cover the same conditions. Each insurer has its own eligibility criteria so you will need to meet these in order to switch. Any declarations made on the switch questions may result in new exclusions being added to your policy. You will need to submit a copy of your current insurance certificate when you apply to switch.
Medical History Disregarded (MHD)
Medical history disregarded or MHD underwriting is only applicable to large group policies – such as company policies. It allows for pre-existing conditions to be covered without exclusions, but it is still subject to the terms and conditions of the policy. This means that pre-existing conditions might be covered.
There is a minimum membership number required to set up an MHD scheme and it often costs more than other methods of underwriting.
What is the best underwriting for pre-existing conditions?
The following should be used only as a guide, you should discuss your individual needs with your adviser to get the most accurate advice.
Regardless of the below, if your condition is ongoing in terms of treatment, medication, or symptoms, you are unlikely to be able to get any medical insurance cover for it.
Major Pre-Existing Conditions
For serious medical conditions that you’ve had in the past, such as cardiac or vascular conditions, a moratorium method of underwriting might be the way to go.
If you have two years after the policy start date with no symptoms, then there is a chance that your insurer will cover it.
If you opt for full medical underwriting, then your pre-existing condition will be included permanently on the list of exclusions.
Minor Pre-Existing Conditions
If you’ve suffered from a very minor condition within the last 5 years, full medical underwriting might be your best choice.
This is because any conditions you have had symptoms, treatment, or advice for in the last 5 years will automatically be excluded for the period of the moratorium, usually 2 years from the policy start date.
However, when your medical history is reviewed when you apply for a fully medically underwritten policy, there is a chance that your insurer will consider the condition to be minor enough to offer you cover for it anyway.
Conclusion
Different methods of underwriting are appropriate for different people and situations. Regardless of your situation, the best way to find your perfect fit is to talk to a knowledgeable and impartial adviser.
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