The underwriting process

One of the biggest issues with applying for insurance is your health.  How healthy are you?  Do you smoke?  Do you drink?  Take or have taken drugs?  Have any pre-existing medical condition, which may include mental health?  Your history of health is important to Insurers because whatever has happened previously may happen again and become a claimable event.  The younger you get cover in place the better as you will have very few pre-existing conditions.  Therefore at application time it is really important to disclose.  Don’t get fixated with the quick fix of getting cover in place straight away, be happy that the Insurer has researched your health thoroughly and has covered it.  The underwriting process can be a long and arduous process in NZ.  The underwriter will initially look at what you have disclosed at application and may ask your Doctor more questions through a PMAR (a medical report).  If you haven’t disclosed on application they may not ask the right quetions!  Therefore it is really important to try and remember everything!  It is important to know that you can ask the Insurer to contact you directly and whatever you tell them under the privacy act is totally private and confidential.

So what next?  Depending on your application they may request blood tests, a build exam, blood pressure tests, an ECG and possibly a full medical.  The Insurer pay for all these including the medical reports and it isn’t cheap.  You’re an investment and if they get it wrong and you die or get sick it will cost them hundreds of thousands to millions of dollars.  In the interim some but not all Insurers will give you up to 60 days of limited free cover while they see if you are insurable.

So why bother?…  Once you have disclosed and they don’t exclude that condition you are basically covered for it.  Depending on the condition even if the Insurer does not want to cover a condition many will review after a few years,  for example if you back hasn’t hurt for xxxx years or you have had xxxx years of good smears they will cover as long as you reapply to have the exclusion removed.   Your adviser should have a note of all exclusions on file and this should be reviewed at policy anniversary.  It pays to review any exclusions that are put in place.  It may mean completing a full application but is definitely worth doing.

There are policies in NZ that do not require medical underwriting.  Funeral Cover is not medically underwritten but depending on the company if you died in the first year of premium payment they would basically just give your premiums back and not the sum insured.  Certain other life, medical policies underwrite at claim time not at application.  I wouldn’t advise getting them as it is far better to disclose and get cover for a condition then give the Insurer a reason out at claim time.  Some of the medical policies do cover some pre-existing conditions after 3 years and therefore do not underwrite at application.

So be aware that the underwriting process may take a long time, Dr’s notes, hospital notes, blood tests and exams.  It sounds like a mission but on a positive note they pay for it not you and it is done properly.

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