Underwriting is no more than a process to determine if you are an insurable risk. The people who do the research and make the decisions about your insurability are called underwriters. In a sense all of us do underwriting every day, for it is no more than an evaluation of risk. Every time you cross a street, you underwrite the situation first by determining if you can get across without being struck by a car. In other words, you determine if there is any risk involved.
Insurance is a business with a bottom line. When a person applies for insurance, and has a medical condition, i.e., bone cancer in his left foot that the medical profession has been treating for ten years at a cost of $3,000 a month, will an insurance company insure him with a premium of $100? The underwriter will look at the records, and if good reason indicates that medical treatment will continue at $3,000 a month, the insurance company would be foolish to insure the individual. By so doing they would lose at least $35,000 a year. If they insured many cases like that, they would go bankrupt or have sky-high premiums.
As a rule the companies with the tightest underwriting guidelines have the best rates and are the best companies to insure you. Because they are careful who they insure, they will remain stable and be able to keep their rates lower than average.
The underwriter has one task–to determine risk, to determine what possible financial outlay may be necessary to care for a person’s medical condition. If they calculate the possible outlay as excessive, the applicant is declined medical coverage. You wouldn’t insure a burning building; likewise, underwriters make sure that their companies do not insure us if it is certain that we have a medical condition that might cause the company to lose money.
When they do insure us, and we then develop medical problems, they are required by law to cover our expenses. But the underwriters made a decision before the medical condition arose (or with the knowledge of a present medical condition), that we were an insurable risk.
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The information and advice on this website was deemed accurate when it was originally published. GNI cannot accept any responsibility or liability for any actions taken on the basis of the information provided, unless that information is subsequently confirmed in writing. For the latest up-to-date information please call us or check brochures and other published materials for latest revision/date.