Welcome to this module on

Life and Health
Underwriting

Duration: 5 minutes

START

This module is audio led.

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A transcript is also available on each screen.

OBJECTIVES

Underwriting and its importance

What is Underwriting?

  • Underwriting is the assessment of risk factors for an insurable risk
  • Critical for risk management
  • It is applied to all forms of insurance risk, for example, medical and non-medical

Underwriting and its importance

Why is it important?

Roll over the highlighted text to learn about them.

Types of risks within Life and Health insurance

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The different underwriting decisions

What are the different underwriting decisions?

Let’s take a deeper dive and learn about the different Underwriting decisions.

Click each box below to learn about the different underwriting decisions.

Standard rates

With this underwriting decision the policyholder pays the premium they were initially quoted.

Standard rates

Rated

This underwriting decision implies that the policyholder has to pay the standard rates premium plus an additional premium.

Additional premium = Additional risk factors

Rated

Postponed

An underwriting decision is postponed when the risk factors presented are too high to offer the cover.

The cover is usually postponed for a set period of time. An applicant can re apply for insurance cover once that set period is over.

Postponed

Declined

This means the risk factors are too high to consider offering any terms for the policy applied for.

Declined

The Underwriting process

Steps in Underwriting

  • Here are the steps involved in an Underwriting process.

    Click each tile to reveal the steps.

  • Here are the steps involved in an Underwriting process.

    Click each tile to reveal the steps.

    STEP 1

    The underwriter assesses the application form.

  • Here are the steps involved in an Underwriting process.

    Click each tile to reveal the steps.

    STEP 2

    Additional medical and non-medical evidence is obtained.

  • Here are the steps involved in an Underwriting process.

    Click each tile to reveal the steps.

    STEP 3

    The application and supportive evidence is reviewed.

  • Here are the steps involved in an Underwriting process.

    Click each tile to reveal the steps.

    STEP 4

    The underwriter assesses the risk.
    • Refer to the underwriting manual
    • Consult a qualified medical officer

  • Here are the steps involved in an Underwriting process.

    Click each tile to reveal the steps.

    STEP 5

    Make the underwriting decision.

Underwriting evidence

What evidence is sought by underwriters?

Click each button to learn more.

  • What evidence is sought by underwriters?

    Information required for underwriting a case.

    • Medical evidence
    • Non-medical evidence
      • Financial evidence
      • Other evidence
  • Medical evidence
    • General 'practitioner's report'
    • Medical examination
    • Blood tests and other medical tests
    • Undergo a medical examination
    • Provide medical evidence related to the individual’s health
  • Non-medical evidence
    • Financial statements
    • Financial questionnaire
  • Financial evidence:
    • Evidence of a person’s financial income
    • Proof to show the person earns enough money to warrant the amount of cover

    Examples:
    Payslips, profit and loss accounts, balance sheet etc.

  • Other evidence:

    Questionnaires designed to assess the risks involved in their jobs or hobbies.


    For example:
    Rock climbing, scuba diving, working at heights, construction worker

Conclusion

Summary

You have come to the end of this module. You should now be able to:
  • Describe what Underwriting is and why it’s important
  • Identify the types of risks in Life and Health insurance
  • List the different underwriting decisions
  • Outline the process of underwriting
  • Explain the various types of underwriting evidence

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