Last Updated on by Tree of Wealth
Outcomes of the Underwriting Evaluation
Simply put, there are usually 4 outcomes coming from the underwriting process and they are either: Yes, No, Maybe, Wait.
Upon concluding the underwriting assessment, insurers arrive at a pivotal decision regarding an insurance application. The possible verdicts include:
Offer Standard Terms: This is the most favorable outcome for an applicant, where the underwriter deems the risk profile to align with the insurer’s norm. In this scenario, the application is approved at the quoted standard premium without any additional costs or restrictions. The majority of applicants find themselves in this category.
Offer with Loading (Extra Premium) and/or Exclusion: In instances where an applicant’s risk profile deviates from the standard due to factors like obesity or pre-existing health issues, the underwriter might still approve the application but with caveats. This could mean higher premiums or specific exclusions. For instance, an applicant with pre-existing hearing loss might face an exclusion related to any disabilities stemming from that condition. Insurers will then present a counteroffer outlining these modified terms for the applicant to consider.
Interested to learn more?
Fill in the form below and we will get back to you!
Postpone Cover: Sometimes, an insurer may choose to defer the application. This can occur if the applicant is scheduled for surgery, which introduces considerable risk and uncertainty. In such cases, the insurer will reassess the application once the risk associated with the surgery has passed.
Decline Cover: If the underwriter concludes that the risk profile is beyond the insurer’s acceptable limits—for severe conditions like unmanaged hypertension, for instance—the application will be declined. However, should the applicant’s health status improve, they are encouraged to reapply. Additionally, for existing policies with previous loadings or exclusions, if there is substantial improvement in the applicant’s health, they can present new medical evidence for a potential reassessment of their risk profile.
Evaluation during the Underwriting Process
The underwriting process conducted by an insurer entails an in-depth analysis of various elements, including the applicant’s medical conditions and the nature of the coverage sought. The insurer carefully weighs the gravity of any health issues presented and how they may impact the coverage terms.
Take, for example, an individual with a history of a slipped disc. While the insurer may extend life coverage under standard terms, they might introduce specific exclusions for the total and permanent disability benefit (TPD) and the hospitalisation benefit due to the increased likelihood of needing surgical intervention and subsequent hospitalisation.
Related
Best Early Stage Multiple Pay Critical Illness Plan Singapore 2024 [In-Depth Comparison]
In cases where the risks are spread across multiple systems—such as with diabetes, which can affect the heart, eyes, nerves, skin, kidneys, and more—the insurer might opt not to provide certain benefits like TPD, critical illness, or hospitalisation coverage, particularly if the condition is not well-managed.
Conversely, if the medical issue is isolated and does not impact other organs or systems, the insurer could offer coverage but exclude the specific condition and its direct risks from the policy. Blindness is one such condition where, despite the coverage being provided, the direct risks associated with it might be specifically excluded.
You May Be Interested
Best Term Insurance Plans Singapore 2024 [In-Depth Comparison]
Building on our exploration of the underwriting landscape, our next article will delve into real-world case studies of underwriting. By examining diverse scenarios, we will shed light on how insurers navigate complex risk assessments, revealing the intricate decisions behind premium calculations and policy terms.
These case studies will provide tangible insights into the nuanced process that tailors insurance coverage to individual needs. Through this lens, we’ll explore how underwriters balance risk with compassion, ensuring that each client is given consideration befitting their unique situation. Stay tuned to unravel the art and science of underwriting through stories that resonate with real life.
Take the first step towards securing your financial future by connecting with our expert financial advisors.
Interested to learn more?
Fill in the form below and we will get back to you!
By filling out the form below, you initiate a journey towards personalized financial planning that respects your unique needs and circumstances.
Our advisors are equipped to guide you through the complexities of insurance underwriting, helping you understand how it fits into a broader strategy that encompasses saving, investing, and protecting your wealth.
Contact Us Today!
