What is fully underwritten life insurance?

How does fully underwritten life insurance work?

Some life insurance companies ask a number of questions before you take out the policy – this is called a ‘fully underwritten’ policy. Policies that are ‘fully underwritten’ are tailored to your particular circumstances. By answering more questions at the time of application, the life insurer is better able to make an assessment of all the potential risks (health and other factors) of offering insurance cover to you. The main benefit is that the terms of cover are specifically tailored to you, which may reduce the costs of your cover depending on your circumstances. It can also mean greater peace of mind for you and your family, as you know exactly what you are covered for.

Other types of cover

Partially underwritten life insurance

Other life insurers may ask only a few questions when you apply for cover – these are called ‘partially’ underwritten policies. In these cases the cost of the policy is based on the group risk, as opposed to your individual circumstances.

Group Life

There is a third type of cover called ‘Group Life’, which involves very limited or possibly no underwriting, i.e.: no questions are asked at the time of application, and there is no ‘underwriting’ of the cover. Life insurance cover within superannuation may not be underwritten at all. These covers are very convenient to set up and the premiums are payable from your accumulated superannuation funds, so you won’t have to personally deal with the required monthly payments.  However, issues may occur at the time of claim when health and medical questions may be asked.

Benefits of fully underwritten cover

By taking out fully underwritten life insurance cover, you will have more certainty at claims time because the life insurer already has certain information about you.

Although it is quicker to obtain life insurance which has limited or no underwriting (avoiding any upfront medical assessment), the result can be that your individual circumstances have not been fully considered.

If something in your medical history in or the manner of your death is considered significant, there is a chance that your claim entitlement may be significantly reduced, or even denied.

At NobleOak, we only offer fully underwritten cover. You will need to provide more detailed information when you apply but this will provide you more certainty at claim time, and possibly at a lower cost than partially underwritten cover.