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Underwriting
Underwriting refers to the process of evaluation that a prospective client has to undergo when
applying for risk benefits – medical as well as occupational underwriting. The better the
underwriting processes, the better the insurer’s chances to rate the client’s risk appropriately. And
if an insurer’s pricing is appropriate, his rates will be sustainable. And sustainable rates are the key
to long-term success in this industry.
Medical underwriting
Medical underwriting involves a look at the client’s medical history. His age, gender, weight, length,
and smoking habits will all play a role. He will be asked for details about existing and previous
medical episodes, medication, procedures, therapies, family medical history and so on, in order to
form an accurate picture of his health outlook over the term.
Occupational underwriting
Occupational underwriting involves a look at the client’s qualifications, level of income, type of
occupation, time spent on administrative duties and so on, in order to form a picture of the client’s
socio-economic status, which plays an essential role in determining his risk. For instance, a person
doing an administrative job in an air-conditioned office has a less risky occupation than a truck
driver.
Part-time activities Underwriting
The life insured will even be asked for details about his
part-time activities
, should they include
dangerous activities such as deep sea diving or hang gliding.
Exclusions and loadings
If the client’s medical history does not warrant standard rates, the insurer may decide to impose a
medical exclusion
on identified risks, or he may add a loading to the premium, or he may refuse
the cover for a specific benefit altogether.
Based on his occupational underwriting, the insurer may decide to exclude certain benefits, or to
impose a
loading,
or to refuse the cover for a specific benefit altogether, if the associated risks
with a specific occupation is deemed too hazardous.
The insurer may also impose a
contractual exclusion or loadings
on certain benefits, or
refuse certain benefits altogether, because of the client’s dangerous part-time activities. The
loadings or exclusions will be stipulated in the contract.
Then there are also the
general exclusions
– blanket exclusions that apply to all the Sanlam
risk benefits. For instance, death due to suicide is not covered. And injuries and disability if they