Justine Zavitz

Justine Zavitz

There’s a good chance that you will have a need for life and health insurance at some point in your life. Insurance companies don’t hand this out like candy on Halloween, they make you work for it and prove that you are in good health. This is referred to as the underwriting process and involves questionnaires, phone calls and sometimes medical exams and reports from your physician.

I won’t sugar coat it – it can be a frustrating process.  Insurance companies can seem very picky over health issues that you and your doctor are not at all concerned about. I frequently get asked, “Why?”

To help put this in perspective, imagine someone asking you to place a bet for millions of dollars on your favourite sports team to win a game 30 years from now.  Once that bet is placed, you can’t take it back regardless of what happens with that team moving forward. Would you take that risk?  How do you know if your team will be any good at that time?  How much research would you do to help you understand if there was a way of predicting the future success or failure of that team? This is exactly what an insurance carrier is doing when trying to determine whether or not to take the bet on you.

You and your doctor get to revisit your health related issues whenever you feel the need and can make adjustments accordingly to proactively manage any concerns. This is not an option for insurance companies. They have to be extremely conservative and base their decisions on what they know about morbidity and mortality.  Once a policy is issued and you accept it, they are on the hook.

Here are some tips to help expedite the process:

  1. Be as thorough as possible on the application.  A “yes” answer on the application does not necessarily mean you will have a modification or decline, but leaving out something important can lead to problems many years from now. 
  2. Be aware of what is in your doctor’s report.  You’d be surprised by what your doctor has included in his/her report from your conversations – however trivial they might seem.
  3. Be prepared to wait between 1-3 months for an answer on your insurability.  The more physicians you’ve seen, the more reports they likely need.  This takes time.
  4. Expect to answer the same questions a number of times with several different people.  This is not meant to be annoying; it is very common that people are more likely to recall information if asked more than once. 

As medical technology improves, life spans are increasing but we are also developing chronic conditions that may cause long-term disabilities. The insurance companies have made certain assumptions concerning mortality and morbidity and have priced their products to pay out claims. Because of the guaranteed nature of many insurance policies, insurance carriers need to be certain that they are taking an acceptable risk on each person. The underwriting process, as frustrating as it may be, is there to ensure that the insurance company is still in business when you need to make a claim. A properly underwritten insurance policy grants you the peace of mind that you and your loved ones will be properly covered when you need it most. The best way to handle this process as a consumer is to manage your expectations and rely on the advice of your trusted advisor.