Understanding Underwriting: Ensuring Fairness and Security
When an employee’s cover exceeds the Medical Proof Free Limit (MPFL) or receives a salary increase that has resulted in their full potential group cover exceeding the MPFL (for the first time), the employee will go through a process called underwriting. This critical step assesses your risk to set fair coverage terms. Let’s explore the key aspects of underwriting and why it’s essential.
What is Underwriting?
Underwriting evaluates a member’s risk factors – like age, health, and lifestyle – to determine insurance terms. The goal is to ensure fair premiums and financial stability for the insurer, ultimately protecting all policyholders.
Benefits of Thorough Underwriting
- Simplified Claims: A detailed underwriting process upfront means claims can be processed more smoothly and quickly because the risks were thoroughly assessed and agreed upon.
- Risk Management: It balances the risk across all policyholders, ensuring the insurer can meet its obligations and offer fair premiums.
The Importance of Honest Disclosures
Accurate and honest information from applicants is crucial. It ensures:
- Fewer Claim Disputes: Accurate disclosures reduce the likelihood of claim denials due to discrepancies.
- Tailored Coverage: Policies accurately reflect the applicant’s needs and risk profile.
Fairness in Underwriting
While underwriting involves extensive questions, these are not meant to find reasons to decline coverage but to fairly assess risks:
- Comprehensive Risk Understanding: Detailed questions help set fair coverage terms.
- Equal Treatment: A standardized approach ensures every applicant is evaluated equally.
- Building Trust: Thoroughness in underwriting demonstrates the insurer’s commitment to fair and transparent risk assessment.
- Decision Trends: Since 2022, less than 4% of eligible applicants have been declined coverage outright, reflecting a commitment to fair evaluation and providing coverage where possible.
Forward Underwriting for Qualifying Applicants
Our forward underwriting option provides long-term security by not requiring frequent re-assessments for qualifying applicants:
- Long-term Coverage: Ensures coverage stability without additional evaluations as circumstances change.
- Streamlined Future Adjustments: Simplifies the process for future coverage changes or increases.
- Consistent Premiums: Locks in coverage based on the initial assessment, protecting against potential increases.
The Appeal Process
If a member is unhappy with the underwriting decision, they can appeal by following these steps:
- Request Reasons: Ask for the reasons behind the decision to be sent to their preferred doctor.
- Submit Written Appeal: Appeal the decision in writing to the insurer.
- Provide Additional Information: Be prepared to provide additional medical information, which will be at their own cost.
- Assessment of New Information: The insurer will review the new information, though it does not guarantee a change in the decision.
Underwriting assesses insurance risk rather than providing health management guidance. Members who receive exclusions or declines should consult with their doctor. We can share the reasons for our decision with the doctor, who can offer personalized advice on health improvements that may enhance their insurability.
Conclusion
Underwriting is the foundation of life insurance, balancing risk and ensuring fair coverage. Thorough upfront assessments lead to easier claims processing, fair treatment, and long-term security for policyholders. Honest disclosures and options like forward underwriting further enhance the insurance experience, providing peace of mind and financial protection.
Author: Mfuneko Solomzi