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Underwriting Explained Medical Insurance

Understanding Medical Underwriting in International Private Medical Insurance (IPMI)

What is underwriting (medical underwriting) in the context of medical insurance?

Underwriting is the process by which an insurance company evaluates the risk of insuring a particular person, property, or event. The goal of underwriting is to ensure that the insurance company can offer coverage that is both affordable and sustainable. To do this, the insurer will assess various factors, such as the person’s age, occupation, lifestyle, and health history. This helps the insurer determine the likelihood that the person will file a claim.  Based on this assessment, the insurer will set the premium, deductible, and coverage limits for the policy. The underwriting process is critical to the functioning of the insurance industry. This as it helps to manage risk and ensure the financial stability of the insurer.

Medical underwriting is a specific type of underwriting that is used in international private medical insurance. Since medical treatment costs can be high, IPMI providers need to assess the health risks of their policyholders. This evaluation helps to set appropriate premiums and ensure financial sustainability. Medical underwriting involves evaluating the health history and current health status of the applicant. This may include a review of medical records, a health questionnaire, and/or a medical examination. Based on this assessment, the insurer may adjust the premium. The insurer may also add coverage exclusions due to pre-existing conditions or waiting periods, or decline the application altogether. Medical underwriting is important for IPMI because it helps to balance the needs of the policyholder with the financial sustainability of the insurer. It also ensures that the insurer is able to cover the expected costs of medical treatments by all its policyholders.

In IPMI there are a number of different types of medical underwriting. Hence, it is important to understand the differences between the various types before you decide on a specific policy.

Full medical underwriting

Full medical underwriting is a process used by insurance companies to assess the health risk of potential policyholders. With full medical underwriting, the insurance company reviews an individual’s medical history and current health status. This helps to determine the level of risk involved in providing them with coverage. The insurer will ask the applicant to complete a detailed medical questionnaire. This typically includes questions about their medical history, pre-existing conditions, medications, and lifestyle habits.

Based on the information provided, the insurer will determine whether or not to offer the applicant coverage. This assessment also guides the insurer to set what the premiums and coverage limits will be. In some cases, the insurer may require the applicant to undergo medical tests or exams. This may help to further evaluate their health status.

Moratorium underwriting

Moratorium underwriting in IPMI is a type of underwriting where certain medical conditions are not covered for a period of, for example, two years from the start date of the policy. During this period, any condition, disease, illness or injury, secondary or associated complaint where the insured has sought or received advice, treatment, therapy, been submitted to a special diet or shown symptoms in the two years prior to the effective date, whether or not the condition has been diagnosed, will not be covered by the policy. However, after the two-year moratorium period, coverage may be provided for those previously excluded conditions provided they are not chronic or need constant medication or regular treatment and advice.

CPME - Continued personal medical exclusions

CPME or Continued Personal Medical Exclusions is a type of underwriting that allows you to maintain the same level of coverage you had on your old policy. This without without undergoing a full medical assessment. With CPME, your new insurer will not reassess your medical history from scratch and may not add any new exclusions. Insurers make this evaluation differently, some ask for 4 years or more history while others are just concerned about the past 12 months.

This type of underwriting is often used for personal policies. It can also be used for small group policies to keep premiums lower. CPME underwriting is especially important for individuals who have had pre-existing medical conditions. Any exclusion on the old plan will be carried over. However, new conditions may be accepted especially minor conditions that occurred more than 1 to 4 years ago. There is no guarantee conditions will be accepted but the probability is higher for acceptance where FMU would most certainly apply an exclusion.

For example, if someone had a heart condition under their old plan, they may face exclusions or higher premiums with a new insurer without CPME underwriting. With CPME, they may continue to receive coverage for their heart condition without any additional exclusions or higher premiums.

MHD - Medical History Disregarded

Medical History Disregarded (MHD) is a type of underwriting commonly used for group policies, which disregards an applicant’s medical history when deciding eligibility and pricing for coverage. MHD underwriting eliminates the need for a medical exam or health questionnaire, as pre-existing conditions are not taken into consideration. For small groups, the insurer may request disclosure of any known significant medical history such as cancer or any major planned treatments before coverage begins, while larger groups are typically not required to provide this information. MHD underwriting may result in higher premiums for the insured group as the insurance company is taking on more risk by not considering the medical history of its members. However, MHD underwriting can be particularly useful for individuals or small groups who have pre-existing conditions or a history of medical issues, as they will not be penalized or charged higher premiums based on their medical history.

No application forms are required for individual members. Instead, the insurer typically only needs general information about the group and individual data such as names, nationalities, dates of birth, and email addresses to set up coverage. This makes the administration of group insurance policies easier since there are no forms to fill out. In some cases, a general group application form with information about the group itself may be required, but this is usually a simple form that only requires basic information.