What Is Medical Underwriting?

Medical Underwriting Explained

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Medical underwriting is the insurance term for the process of reviewing an applicant's medical history to determine their eligibility for a life or health insurance policy and the premium they’ll pay. 

Learn exactly what medical underwriting is, how it works, and the underwriting options available to you.

Definition and Example of Medical Underwriting

Underwriting is an important cog in the insurance application process—your insurance provider examines your suitability for coverage based on the information you provide and the information it gathers to assess its risk of extending you an insurance policy.

Medical underwriting is the process insurance companies use to evaluate their risk by providing life or health insurance coverage. You may need to undergo medical writing when applying for life insurance, long-term care insurance, disability income insurance, critical illness insurance, and some health insurance policies that fall outside the purview of the Affordable Care Act (ACA)

The insurance company evaluates the medical information you provide on your application and other health-related information it collects about you, such as your age, whether you smoke, your current health, health history, family medical history, and prescriptions. It uses this information to determine whether to provide coverage, at what price, and within what limits or exclusions. 

For example, if you're a smoker or have certain medical conditions, an insurer may decide to charge you more for a policy than someone who does not smoke or have medical conditions. Or it may decide to reject your application for coverage entirely. 

Among health insurers, medical underwriting is far less common than it used to be thanks to the ACA, which prevents insurers offering marketplace plans from taking your present health and medical history into account.

How Medical Underwriting Works

Insurers acquire medical information about you from a range of sources, including the application, a medical exam, the Medical Information Bureau (MIB), and a prescription check (or Rx check).

The application and medical exam (if there is one) are how you provide information about your health and health history to potential insurers. The scope of medical questioning differs widely across the insurance policy spectrum. Some life insurance applications, for example, have rigorous medical questionnaires and require physical exams, including lab work. Others may ask few to no medical questions and do not require an exam.

The process of undergoing intensive medical scrutiny may be inconvenient, but it enables the insurer to better assess its risk in extending you a policy, which could mean a lower premium for the coverage you need.

In addition to the application, insurers gather information about you via the following means.

Medical Exam

Your insurance provider may conduct a physical exam at no cost to you. The examiner may inquire about your medical history, record your weight and height measurements, and take blood and urine samples. Insurers use these measures to determine if you have current issues such as diabetes or heart disease, or if in the past you had a stroke or used drugs.

The information collected during the medical exam is strictly confidential and your results are only shared with the underwriting department. You may request a copy of your health exam results for your records, as well.

Medical Information Bureau (MIB) Check

The Medical Information Bureau (MIB) manages a database of insurance applicant information, including things like medical data, your current coverage, and reasons other insurers may have declined your application. Insurers use MIB to cross-check your application, get additional information, and catch oversights like applicants withholding information or misrepresenting details.

Prescription or Rx Review

Your medical underwriter may also review your prescription medication history. While this isn't always required, underwriters use this information to supplement your medical data. The signature on your insurance application often gives your consent for insurance underwriters to access it. 

Depending on the outcome of the underwriting process, one or more of these actions could occur:

  • Premium adjustment. Your insurance company may offer you a policy with a surcharged premium, higher than the standard premium rate for someone in good health. Or it might offer you a preferred rate, meaning a lower premium, if your health is excellent.
  • Coverage exclusion. Your insurer may exclude coverage for the treatment of a specified preexisting condition or a loss resulting from a specified condition.
  • Lower benefits or longer elimination period (where relevant). The benefits and/or elimination period may need to be lower or longer in order to afford coverage.

The length of the medical underwriting process varies from company to company and between types of insurance sought. An underwriter will take more time to investigate the first hint of misrepresentation in an application.

Types of Medical Underwriting

The information gathered in the medical underwriting process varies depending on what type of policy you’re applying for, but generally includes a review of your health history. Here is a sample of underwriting models for life insurance to give you a sense of what you may encounter.

Simplified Issue Underwriting

Simplified issue underwriting is one of the simplest forms of life insurance evaluation. It doesn't rely on information collected through medical exams or bodily fluids, and it asks only a few medical-related questions. Policies issued through simple issue underwriting often provide lower coverage, carry higher premiums, and accommodate policyholders with a wide range of health conditions. The main draw to simplified underwriting is its efficiency.

Some life insurance policies, called guaranteed issue polices, do not review your medical history, nor do they require an exam or answers to medical questions.

Accelerated Underwriting

Accelerated underwriting drops the conventional physical exam and supplements your insurance application with analytics and data from third-party sources, such as the MIB and a prescription history check. A remote interview may also be required. Besides a shorter application process, accelerated underwriting helps insurers cut administrative costs while still providing a level of rigor similar to full medical underwriting. Healthy applicants can usually qualify for preferred rates.

Full Medical Underwriting

Full medical underwriting requires thorough health questions and a physical exam, and insurers may review your prescription drug history. This type of medical underwriting is the most involved, enabling the insurer to best gauge your health and the risk they take on by insuring you. If you’re healthy, it can afford you the best rates.

Key Takeaways

  • Medical underwriting affects the amount you pay in premiums for life or health insurance.
  • Medical underwriting is used during the application for life, long-term-care, disability-income, and critical-illness insurances, as well as some health insurance policies. 
  • An insurance company examines your medical information, including your medical history and lifestyle habits, to determine the risk you pose to them as an applicant.
  • Not all life insurance policies require medical underwriting. Policies like simplified-issue and guaranteed-life insurance don’t mandate a qualifying medical exam.

Article Sources

  1. Society of Actuaries. "Simplified Issue Underwriting," Page 8. Accessed July 13, 2021

  2. NAIC. "Emerging Underwriting Methodologies and Their Impact on Mortality Experience Delphi Study," Page 9. Accessed July 13, 2021.