When you first take out a new health insurance policy either as an individual or by joining your employer’s scheme, there will have some sort of mechanism to exclude pre-existing medical conditions. Unless your employer’s scheme has “medical history disregarded (MHD)” underwriting, then the initial underwriting will either be “Full Medical Underwriting (FMU)” or a “New Moratorium”.

Here we discuss the pros and cons of FMU, for details of a new moratorium click here.

For FMU you complete a health questionnaire and personal health declaration as part of the application process. If you’ve no health conditions a policy will be issued with no personal medical exclusions.

If you have any current or past health conditions you may need to provide more information and the insurer may (based on the details you provide) issue specific exclusions for your pre-existing conditions. These personal medical exclusions will be detailed on a “health certificate”.

Such exclusions are normally permanent (i.e. the condition will remain excluded for the life of the underwriting) but an insurer may be willing to review any exclusions at a later date and could remove them, they will normally only review exclusions at policy renewal.

Advantages of Full Medical Underwriting:

  • If you have no or only a few exclusions it’s straight forward – Unlike moratorium underwriting FMU is relatively simple to understand, plus any exclusions will be detailed so you can be sure that you’re covered before you claim.
  • It should mean claims are handled quickly- With moratorium underwriting claims are underwritten at the point of claim which occasionally leads to a delay, in theory with FMU there should be no delay but we are witnessing claims being delayed in the first years of a new policy because insurers are checking medical records against the declarations made during the application.
  • It’s often cheaper –  FMU can result in lower premiums. Vitality currently offers a 5% discount.

Disadvantages of Full Medical Underwriting:

  • Personal medical exclusions can be broad- Some insurers can seem draconian when they apply broad exclusions for what you view as minor medical conditions.
  • If the insurer applies numerous exclusions it can become complicated to understand the implications-in this instance having an advisor to explain the implications of the insurer’s exclusions can be useful.
  • It’s time consuming – There are forms to complete and questions to answer. It’s therefore a much slower application process than moratorium underwriting.
  • Disclosure –  If you’ve failed in the application process to disclose information or you’ve provided inaccurate information this may cause problems when claiming. Remember, if you aren’t sure whether to mention something – mention it anyway!
  • Historic conditions can be excluded – Pre-existing conditions from any point in your medical history may face exclusion, with moratorium underwriting only ailments from the five years before you took out the policy are considered for exclusion.
  • Exclusions are normally permanent – Unlike Moratorium underwriting your pre-existing conditions will not regain cover after an agreed period unless you apply to the insurer to have them removed.
  • Additional costs – There may be a cost involved if the insurer requires further medical reports from your GP. This could be during the application process or to support a case for removing an existing exclusion in the future. Either way your insurer may expect you to pay.

So, is full medical underwriting the right choice for me?

In general, FMU is a great choice for;

  • Healthy people – If you’ve enjoyed good health (and you don’t mind the paperwork) then FMU will impose few if any exclusions.
  • If you value certainty- If you complete the insurer’s application forms completely honestly then you can be confident when claiming that new conditions will be covered. With moratorium underwriting there can be some uncertainty if a condition that you are claiming for is related to a pre-existing condition that you’ve had in the past. As an example if you’ve had a knee condition that caused you to walk with a limp your insurer could refuse a claim for a hip condition on the basis that the two conditions are related.
  • People looking to contain costs – Insurers generally consider FMU lower risk and premiums will tend to be lower and special FMU discounts may be available.

If you would like advice on the best option for you then please get in touch.

Ashley Woodrow – Health Insurance Advisor 21/08/2017