Medical underwriting may be a schlep – but it could save you money!

Published on 27th September, 2022 at 04:32 pm

Medical underwriting plays an important role not only in determining the cover you are eligible for, but your monthly premium, too.

Reading time: 3 minutes

In this article you’ll learn:

• What medical underwriting is.
• Why it’s important for your financial protection.
• How medical underwriting can save you money.

Assessments needed for underwriting can be tedious, and you might discover something negative about your health and potentially not qualify for the cover you want, but it’s vital that you do them. Product actuary at Sanlam Individual Life Karen Bongers discusses why it’s not something to shy away from, and how it can save you money.

What is medical underwriting?

Medical underwriting is the process whereby a life insurer gathers information about your medical history and uses it to determine whether they can offer you cover, and on which terms, explains Bongers.

Why is medical underwriting so important?

It assesses the risk of the person seeking insurance, enabling an insurer to set a premium in line with their risk. This keeps premiums as low as possible for most customers, as it prevents the relatively healthy majority from subsidising the premiums of those who have a higher risk profile.

What does medical underwriting involve?

“When you apply for life cover you would usually be required to answer health-related questions,” says Bongers. On top of this, your insurer might ask you to provide past medical reports, or ask you to undero medical tests. “The most common medical tests are a Cotinine test and HIV test. Others could include blood tests, ECGs, or a doctor’s exam,” she adds.

How medical underwriting can save you time and money

Medical and other types of underwriting can save you money and give you access to larger cover amounts. “For example, for a premium of R110 per month, a 40-year-old male can potentially get R50 000 funeral cover or R625 000 underwritten life cover*,” says Bongers. “The main reason for the difference in price is the underwriting associated with life cover, funeral cover not being underwritten.”

Read more about the difference between the two here.

Other advantages of medical underwriting

• Finding out about potential health conditions at an early stage
• Being charged the premium that accurately reflects your risk profile
• Obtaining the maximum cover for your policy
• Providing much-needed financial security for your family

How can hiding information cost you?

If you provide inaccurate or incomplete information, and this comes to light at claim stage, you risk your payout being reduced or your claim being declined. “It is therefore important to be honest with your insurer,” urges Bongers. “This enables them to charge you a premium in line with your risk profile, and provides you with the peace of mind that your cover will serve its intended purpose.”

*The quoted amounts are for illustrative purposes only, and assume the client is a healthy non-smoker rate group 4 client, taking a Sanlam Classic risk plan on a Fixed Compulsory payment pattern. Speak to an accredited Sanlam financial planner for a quote that considers your particular risk profile.

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Each participating Wealth Bonus product comes with a built-in, wealth-building benefit. These benefits are collected in your Wealth Bonus portfolio. When you take out a participating Wealth Bonus product, like certain risk cover products, and with each premium or contribution you pay towards it, Sanlam matches this, up to 100%, by contributing to your Wealth Bonus.