subject: Understanding The Underwriting Process When Buying Individual Health Insurance [print this page] Whether you have group insurance through your place of employement or you buy individual health insurance directly from an insurance carrier, you have gone through underwriting. Underwriting is process used by insurance companies to determine the risk factors of single individuals or the risk factors of a group as a whole. Once the level of risk is determined then carriers will be able to determine premiums that correspond to this level of risk. If you have traditionally been on group plans you probably haven't felt the effects of underwriting; however those that buy their own coverage will feel it the most. This article will touch on the underwriting process so that you can better understand what may be affecting your final price.
Underwriting is a process that financial service providers use to assess their customer's eligibility to purchase their products. It has been around for a long time and is used in several industries besides the group and individual health insurance market such as securities, banking, and real estate. The goal in underwriting is to minimize the risk of loss while maximizing profits for the insurance carrier. As such, when evaluating you for coverage an underwrtiter will take many factors into consideration. These factors include vital statistics, such as age and weight, the type of lifestyle you live, your health status, and sometimes even occupation. Some of the factors that affect the cost of your health insurance coverage are under your control. For example, if you indulge in unhealthy habits, such as smoking, or your are overweight your insurance premiums will likely be higher. The insurance company is anticipating that you may need major care, such as cancer treatment for lung cancer, and want to mitigate their losses by charging you more for your individual health insurance. Other factors may make it difficult for you to obtain insurance. People with preexisting conditions will find it particularly challenging to get companies to insure them because of the potential loss they represent.
Each company has different underwriting processes and practices. Therefore, conceivably, being rejected by one insurance company does not mean you will not be able to get individual health insurance from any of them. What one company deems as risky, another insurance company may see as no big deal. It is highly recommended that when shopping for insurance you work with a local independent health insurance agent that works with several carriers as they are well versed in the underwriting processes of each. They can evaluate your individual needs and make suggestions as to which carriers will be the best choice based on your current health situation.
by: Kent Kingsley
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