What May Be Your Insurance Offer after Medical Declaration

When we apply health status related insurance (e.g. life insurance, critical illness insurance and hospitalisation insurance), we have to answer the medical questionnaire from the insurance company. The answers to the medical questionnaire must reflect the fact of the life assured, in order to avoid dispute during a claim. Many people ask me, if there is a health condition declared in the medical questionnaire, what may be the outcome of the insurance offer? This article provides an answer.

When the insurance company receives an insurance application, they will let their underwriter assess the medical questionnaire. If there is a health condition declared in the questionnaire, the underwriter has to assess the risks. If the client submitted sufficient materials and information for this health condition, the underwriter is more likely to come to an upfront conclusion. If the materials and information are not sufficient, the underwriter may ask for more materials or information from the client, or arrange a medical check-up for the life assured, before it comes to a conclusion. There are five possible underwriting conclusions as follows:

1. Standard. The underwriter concludes that the health condition of the life assured is minor and within standard risk range. So the insurance company can offer the life assured standard term of the insurance contract.

2. Cover with loading. The underwriter concludes that although the risk of the life assured’s health condition can still be covered by the insurance company, the risk is significantly higher. So the insurance company can only cover the life assured provided that the client pays extra insurance premium.

3. Cover with exclusion. The underwriter concludes that the health condition of the life assured falls outside the risk range which the insurance company is able to cover, so the specific health condition and anything caused by it will be excluded from the coverage. However, because the health condition is relatively isolated, it will not affect the overall health status of the life assured. So the life assured will still be covered except for this exclusion.

4. Postponed. The underwriter finds that no conclusion can be made based on the current materials and information. He or she has to review the life assured after a specific period from now. So the life assured will not be offered any coverage temporarily.

5. Declined. The underwriter concludes that the health condition of the life assured falls outside the risk range which the insurance company is able to cover. And the health condition can’t be isolated from the life assured’s overall health status. So the insurance company can’t offer coverage for the life assured.

Under the situation of cover with loading and cover with exclusion, if the client accepts this insurance offer, he or she can still request for reviewing the case in the future. If in the future it can be proved that the health condition of the life assured improves significantly, there is chance that standard cover will be offered.

At the beginning of this article, I mentioned that there are three main categories of health status related insurance. They are life insurance, critical illness insurance and hospitalisation insurance. Under the same health condition, a life assured may be offered different underwriting terms for these three categories. Life insurance only pays upon the death of the life assured, which has the lowest probability among the three, so its underwriting is the least stringent. Critical illness insurance pays when the life assured is diagnosed with critical illness. The probability is higher than death but lower than hospitalisation. So its underwriting stringent level is between the other two. Hospitalisation insurance pays as long as the life assured is hospitalised. The probability is the highest among the three. So its underwriting is also the most stringent. If you are not sure what are the differences between critical illness insurance and hospitalisation insurance, you can watch my previous video here.

Then you may ask, what are the possible underwriting conclusions for common health conditions? Here are several examples:

High blood pressure: High blood pressure usually refers to a blood pressure reading persistently higher than 140/90 mmHg. There are different severity levels for high blood pressure. The higher the reading, and the longer the life assured sustains high blood pressure, the more serious the condition is. Depending on the severity level, life insurance and critical illness insurance may offer cover with loading or may decline the application; hospitalization insurance may offer cover with exclusion or may decline the application.

Anemia: Anemia usually refers to a low level of hemoglobin inside the blood. For minor anemia, life insurance and critical illness insurance may offer standard cover, and hospitalization insurance may offer cover with exclusion; For severe anemia, life insurance and critical illness insurance may offer cover with loading or may decline the application, and hospitalization insurance may decline the application.

Blood in urine: Blood in urine usually means that there are red blood cells found in the urine sample under microscope. There are many possible reasons leading to blood in urine. Before the specific reason is found out by further investigation, usually insurance companies will postpone the case until the reason is clear.

Hepatitis B carrier: There are two types of Hepatitis B carriers. One type the HBeAg is negative, while the other type the HBeAg is positive. For the former type, life insurance and critical illness insurance may offer standard cover, and hospitalisation insurance may offer cover with exclusion. For the latter type, life insurance and critical illness insurance may offer cover with loading, and hospitalisation insurance may offer cover with exclusion or may decline the application.

Fibroid: If the life assured had benign fibroid before, but it has been removed by operation or it has disappeared, and it did not recur for certain number of years, life insurance, critical illness insurance and hospitalization insurance may offer standard cover. If the life assured currently has benign fibroid, life insurance, critical illness insurance and hospitalization insurance may offer cover with exclusion.

Breast cyst or nodule: If the life assured had benign breast cyst or nodule before, but it has been removed by operation or it has disappeared, and it did not recur for certain number of years, life insurance, critical illness insurance and hospitalization insurance may offer standard cover. If the life assured currently has benign breast cyst or nodule, life insurance, critical illness insurance and hospitalization insurance may offer cover with exclusion.

Kidney stone: If the life assured had kidney stone before, but it has gone out and it did not recur for certain number of years, life insurance, critical illness insurance and hospitalization insurance may offer standard cover. If the period between the time when the stone went out and the time of the application is too short, life insurance, critical illness insurance and hospitalization insurance may offer cover with exclusion.

Above is my preliminary judgement based on my experience. A specific underwriting process is case by case. If you intend to apply for insurance, but unfortunately there is minor health condition and you want to know what will be the underwriting conclusion, do feel free to contact me. I can submit your case anonymously for preliminary underwriting and come back with a conclusion for you.