Health Insurance: Paying More for Less?



“Medical underwriting for low-value life insurance typically involves a simple blood test, while policies sold to older customers or for high coverage may require more detailed testing and a full health check by your doctor or an insurer-appointed doctor,” says Thembisa Mapukata, General Manager: Tied Sales Distribution at the Old Mutual Mass and Foundation Cluster.

“We describe underwriting as the process of gathering health and lifestyle information about a potential client. An individual risk profile is created from this information; the risk profile then determines the premium for the chosen coverage level,” explains Mapukata.

Depending on the sum insured and the policy you have taken out, your insurer will require either a simplified underwriting (questions only, no medical services) or a full underwriting (questions and medical services).

Simplified underwriting involves nothing more than answering a range of health and lifestyle questions without medical testing. Full underwriting, on the other hand, involves a full medical exam and questionnaire that must be answered honestly and accurately by a doctor.

The three myths of underwriting

There are three reasons why you might have concerns about opting for full underwriting:

  • The first is that you might find out something negative about your health. This issue is easy to address as it is important to know about serious medical conditions as early as possible so that you have time to seek the necessary medical treatment that will help you live a long and healthy life.
  • The second concern is that the full underwriting process could uncover a condition that will prevent you from taking out the life insurance policy. While this is a possibility, it’s important to note that a medical condition disclosed during underwriting does not automatically prevent you from obtaining life insurance. The insurer may still offer you coverage that excludes certain conditions, or charge you a higher premium to compensate for the higher risk associated with your condition.

“You have to keep in mind that hiding a medical condition from your insurer or lying when you fill out the questionnaire will almost certainly result in your future claim being denied,” warns Mapukata.

  • The third concern is that going all the way through the underwriting process will compromise your privacy. After all, nobody wants a complete stranger to find out about their health problems. These concerns are perhaps the easiest of the three to dismiss as all medical underwriting procedures and requirements are conducted with the utmost respect for your privacy.

But there is good news

The good news, however, is that once full underwriting is complete, your premium will be calculated precisely based on your individual risk profile. But if you don’t underwrite, you could end up paying so much more, even for a condition you don’t have (and therefore don’t need insurance coverage for), since the insurer will be making all sorts of assumptions about your risk profile.

One of the best ways to make a difficult decision is to list the pros and cons. So, some of the benefits of full underwriting include learning about potential health conditions early on. You will be charged the premium that accurately reflects your risk profile; Get maximum coverage on your policy and give your family some much-needed financial security.

And the disadvantages? In the worst case, some conditions could be excluded from your policy or your monthly premium will be higher; However, these options are far better than having your claim denied.

If you complete this simple “pros and cons” exercise, you won’t hesitate to walk the entire underwriting journey.

“The decision to undergo the full underwriting process could turn out to be one of the best decisions you make. Not only do you get more value from your insurance coverage, but you also ensure that you protect your family’s financial future and leave a legacy,” concludes Mapukata.

*This article does not constitute financial advice. Old Mutual Life Assurance Company (SA) Limited is a licensed FSP and life insurer.

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