The underwriting process

(aka: when they decide if they are going to insure you or not)

Fact of the day; The origins of the term ‘underwrite’ were from around the 17th century in marine insurance. Basically, the ship’s captain would supply a written document with their cargo and destination details, and if a wealthy individual was willing to insure it, they would sign their name underneath the list at the bottom of the document. So, it was literally ‘underwritten’.

Modern underwriting is a bit different. It is the process of the insurance company assessing your medical, lifestyle, occupational and financial profile. In other words, how ‘risky’ is it to insure you. We start with the ‘standard’ risk, which premiums are generally set by. People outside that standard risk may see exclusions on their policy or a premium loading to account for the additional risk. In some cases, the application may even be declined. If you’re like me, with a dodgy back and crook knees (thanks rugby!) expect them to be excluded. It all depends what products you are applying for too. My dodgy back isn’t really a concern for life cover however it would be for Income Cover as it could impact my ability to work.

You’ll find there are a lot of questions in an application, and it can feel a bit like you’re on trial, but there is a very good reason for it. The application is the one and only chance the underwriters get to check how risky you are to insure. An old colleague of mine once referred to underwriting as a castle wall. It may take a bit of work to climb over it, but once you’re over that wall you are safe and there is no going back for the insurance company. The underwriter has now accepted you. You are safely behind the wall and covered for whatever life throws at you.

But…there is always a but…disclosure is critical. The insurance company is relying on you to be honest and truthful. Yes, it may lead to an exclusion or loading, but at least you have certainty around what you are covered / or not covered for.  If you don’t disclose at application time then it may result in issues at claim time, meaning you may not receive the benefit you were expecting at a time when you really need it. If disclosure is discovered, no one wins! A financial adviser will guide you through the process, and with 20 years working for those insurance companies, I’m pretty good at understanding the application process. So if you’ve been putting it off, get in touch and I can walk you through the process.