Medical underwriting is the process in which a health or life insurance company evaluates an applicant's medical history in order to make a decision about the approval of the application as well as the cost of policy premiums. In some areas, the practice can be restricted or limited by law. During the medical underwriting process, applicants may be asked to provide detailed information about their medical history to an insurer. If applying for a life insurance policy, a medical exam may be required.
When an individual or family applies for an insurance policy or an employer requests a group policy for its employees, the insurance company will evaluate the application and will typically request that applicants or company employees complete a questionnaire about their health history. The purpose of this activity is to let the insurer know if an applicant or an applicant's employees pose a significant risk of actually filing health-insurance claims. The more claims filed, the more claims that the insurance company will have to pay out. If an applicant has a history of medical problems or has filed numerous health insurance claims in the past, an insurer may deny the application outright or request that the applicant pay higher premiums so as to make up for the potential loss of revenue to the insurer.
In the United States, medical underwriting is commonplace in the issuing of individual and group health insurance policies, though changes in federal health care law may significantly restrict the practice. In the United Kingdom, those who take advantage of private medical insurance may have the option of choosing to undergo full medical underwriting, a comprehensive process in which their medical histories are scrutinized. Alternatively, they may take out a moratorium policy that does not require extensive underwriting, but does exclude pre-existing conditions from insurance coverage for at least two years after the policy is issued.
Some critics of medical underwriting have argued that it unfairly discriminates against individuals with medical conditions and that the practice makes it difficult for people to afford health coverage. Proponents argue that insurance companies need to be able to set reasonable standards for coverage so as to remain profitable and stay in business. In some jurisdictions, individuals who are unable to get health insurance due to their medical histories may be able to obtain government-sponsored policies that do not require medical underwriting as a condition of issuance.
