Health insurance protects you against high-cost medical care when necessary. Hence, when an insurer is considering providing health insurance coverage, there are several factors that they may evaluate before making a decision. This is called underwriting. In simple terms, underwriting is the process in which an insurance company evaluates the risk of insuring a customer’s health. Depending on the risk factors involved, it then makes a decision on providing the coverage to a person. The pricing parameters also determine the premium paid by a customer.
Insurers use complex pricing models that are developed using data analytics, regulatory guidelines, and actuarial inputs. As part of the process, insurers also seek detailed information about the customer to fill out in a proposal form. A Proposal form is a document between the insurer and the insured, and it usually varies from insurer to insurer. The proposal form may require customers to disclose basic information about the persons to be insured, coverage details, existing insurance policies, and medical history, among others.
Let us look at some important details the insurer may seek from you to underwrite and price your policy:
- Proposer details: You are required to share information such as your name, address, date of birth, marital status, first policy inception date (if any), policy type, and family composition. The proposer also has to share other common personal details such as e-mail address, mobile number, and government ID proof.
- Details of persons to be insured: Depending on whether you are looking for an individual plan or a family plan, you will be required to submit details of all the persons to be insured under the policy. The details include the full name, date of birth, age, gender, height, weight, occupation, nominee name, and relationship of the insured with the proposer.
- Coverage details: This is a detailed section that contains information about the various benefits provided by a policy, as well as sub-limits, waiting periods, deductibles, or other specific conditions attached to such benefits. Details of any optional covers opted for will also be mentioned in this section. You will also have to disclose the details of any existing insurance policies you may have and list out details of the sum insured, and any claims made in the past. This section will also explicitly mention any special terms and exclusions the insurer will impose.
- Premium payment zone and geographical limits: The premiums you pay may vary based on the zone you reside in, which is classified based on the treatment costs in different cities. Remember, this may vary from insurer to insurer. For instance, Zone A may include cities like Delhi/NCR and Mumbai, while Zone B may include Hyderabad, Bangalore, Kolkata, Ahmedabad, Vadodara, Chennai, Pune, etc., while Zone C may include the rest of India, apart from Zone A and Zone B cities. So, for instance, if a person from Zone B or Zone C seeks treatment in Zone A, the insurer may apply a co-pay to the admissible claim. Some insurers don’t impose zone-based co-payment. The insurer may also apply a geographical limit so that treatments cannot be undertaken in certain countries if the policy includes worldwide coverage.
- Medical history: This is the most crucial part of the proposal form, and the underwriting team typically studies this section before making their decision on proposal acceptance. The overall risk assessment done by the underwriting team will include a series of questions about the customer’s medical history and personal habits. This includes the submission of a detailed history of any ongoing and previous medical conditions, including any form of hospitalisation, surgeries, and lifestyle choices such as smoking, alcohol consumption, and unhealthy habits that can increase the risk of certain illnesses.
For proposers older than 50 years or those with past illnesses or conditions, the insurer may also suggest the proposer to undergo a medical examination. Based on this, the insurer in some cases may also apply an additional loading on the premiums or apply illness-specific waiting periods. Once this process is complete, underwriting decisions are validated based on the medical assessment and the company’s underwriting guidelines, and the policy is accordingly issued to the customer.
As a customer, do ensure that the information provided in the proposal form is accurate and true to the best of your knowledge. Falsified information may result in claims rejection, and that could leave a dent in your financial health.
Views expressed above are the author’s own.
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