This is the name of the process used by an insurance company to assess the risk posed to them of a particular event occurring, which in turn, may mean that they may have to pay a claim on a policy that they have provided to a 3rd party.
For life insurance plans, cancel you have completed an application form, your request for cover is assessed against the companies perceived risk and appropriate premium rates are calculated.
Some insurance companies now employ the services of qualified doctors and nurses to interpret reports and medicals from GP's and to help determine the amount of any premium loading.
Some now even employ qualified medical staff to work in their medical underwriting telephone call centres. Their specific role is to make contact with the proposed life assured to confidentially discuss their medical history with them before premiums rates are confirmed.
Once the underwriters have assessed an application, terms may be offered and the cost of the plan will be confirmed. In many cases this will be the price originally quoted and normal rates will apply.
However, in some cases a loading may be applied. This has the effect of increasing the cost of the plan and in some more serious cases the underwriter may refuse to offer cover at any price. For those people offered cover on special terms, the provider is openly stating that they think that the risk of a claim is actually higher than average. As such this makes cover potentially even more important to have in place.
Establishing your own life insurance needs
Next: How do I make a claim?
