Underwriting

Underwriting is the process by which an insurance company evaluates an applicant’s risk to determine whether coverage can be offered, what terms will apply, and how much the premium will cost. It involves reviewing personal, medical, occupational, and lifestyle information to assess the likelihood of future claims. The goal of underwriting is to ensure fairness by matching the cost of coverage to the level of risk presented by each applicant.

‍

There are different types of underwriting depending on the product. Medically underwritten policies require health questionnaires and, in some cases, medical tests. Simplified issue plans ask only a few basic health questions, while guaranteed issue plans require no medical information at all. In group insurance, underwriting is often applied collectively to the entire group rather than to individual members, which makes coverage easier to obtain.

‍

Example:

‍

If you apply for an individual disability insurance policy, the insurer will ask questions about your health, occupation, and lifestyle. Based on your responses, the underwriter decides whether to approve coverage, exclude certain conditions, or adjust your premium.

‍

What to Watch For:

‍

Answer all underwriting questions honestly and completely, as omissions or inaccuracies may result in denied claims or canceled coverage. Once a policy is approved, the insurer cannot change terms based on new health conditions unless stated otherwise in the policy. Understanding the type of underwriting applied helps you anticipate approval time, cost, and benefit options.