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What is Medical Underwriting in Life Insurance?

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Medical Underwriting in Life Insurance
October 20, 2023

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To protect our loved ones from financial struggles if we die an untimely death, life insurance has always been a popular and sound choice. In exchange for the premiums paid by the policyholder, the insurance company pays the bereaved family the sum assured, in the event of untimely death of the policyholder.

From the insurer’s point of view, the probability of the insured’s death within the policy term is the market risk it undertakes. Also, there’s a need to check whether the policyholder will be able to pay the entire premium schedule. The insurance company therefore carefully reviews each application based on the potential buyer’s medical and financial information available. This process of checking the credibility of the proposals for their approval is termed underwriting in life insurance.

Broadly speaking, underwriting in life insurance can be divided into two categories— medical and financial. Let us focus on medical underwriting for now.

What is medical underwriting in life insurance?

The life expectancy of any individual depends on certain factors affecting his/her health and lifestyle. For example, obese people are more prone to heart diseases which increases their probability of early demise, increasing the risk for the insurer. In such a case, the company can either reject the application for life insurance, reduce the coverage or increase the premium to compensate the risk. To arrive at these decisions, the insurer therefore evaluates the overall medical condition of the applicant. This process of assessment of the health condition of a potential policyholder, carried out by a designated person or department is called medical underwriting in life insurance. Usually, the applicant’s age, health conditions, weight and body mass index (BMI), lifestyle and smoking habits, and the family’s medical history are the parameters taken into account for medical underwriting.

Types of medical underwritings

In India, medical underwriting in life insurance can be of two major categories:

  • Full medical underwriting where a complete assessment of the applicant’s health condition is ensured.
  • Simplified issue underwriting where the assessment is based only on the information provided by the applicant.

Let us now delve deeper into these processes.

What is full medical underwriting?

While applying for life insurance, the applicant needs to share his/her medical history and records. Full medical underwriting is the assessment process where alongside the available information, the applicant needs to go through a thorough medical check-up that comprises a host of examinations including blood and urine tests. In addition, the applicant needs to submit scan reports, X-rays and other medical records.

What is simplified issue underwriting?

Simplified issue underwriting is based on the medical records and information shared by the applicant and involves no further check-ups. Here, in addition, the applicant is asked a few questions regarding their overall health and lifestyle. The information thus collected is assessed to decide whether the policy proposal will be approved or rejected.

The underwriters and their job

The underwriters are a set of people designated to assess the applicant’s medical or financial conditions on behalf of the insurance company. Their job involves checking all the health details shared by the applicant as well as the medical examination results to decide on policy approval.

Processes involved in medical underwriting

The medical underwriting process in life insurance involves a 2-step verification:

Quality check:
This involves checking all the details shared by the potential policyholder in the application form.

Medical tests:
This part requires the underwriter to evaluate all the records and the medical check-up reports of the applicants. Reports of blood, urine tests, height, weight, BMI and blood pressure are assessed to trace indications of heart ailments, diabetes and blood-related complications.

This thorough evaluation process takes about 3-8 weeks and determines whether the policy application gets approved or rejected. Accordingly, the policyholder gets to sign the document to get the policy running.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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