Unhealthy People and Insurance

Risk Underwriting I am in what I call “Underwriting Hell”.

Underwriting in the context of insurance refers to the process where insurers assess the risk of an individual applying to take up insurance cover by looking at his medical history and health condition. Unhealthy people will naturally complicate the process, leading to a lot of added paperwork, trouble and complexities.

I am not sure whether Singaporeans are really unhealthy, or it is just through self-selection that I encounter many of such people who only look for insurance when they have health problems. Surprisingly, many of such clients are relatively young people who are supposed to be in the pink of health.

Difficulties in getting insurance coverage

Since I recommend my insurance planning clients to take up beneficial forms of coverage which typically represent less profits and more risk for the insurers, the underwriting process becomes more tedious. Often, a great deal of work is done only for the insurer to decline the case or impose harsh special terms such that it becomes unattractive to the client. My colleagues have since declared that some policies are only available to superhumans who are immortal and perfectly healthy.

As an independent adviser, I will also help such clients do things like apply coverage with multiple insurers and source for alternative solutions when traditional approaches fall through. I do all of these to ensure that my clients can get the best coverage despite their pre-existing conditions. Lately I had a case where I helped my client get standard terms after he got adverse special terms with a policy he signed up through a tied agent. That delivered a much welcomed sense of job satisfaction.

Of course, the proverb holds true – no good deed goes unpunished. Due to the delay in the processing time, it can mean that I go weeks or even months without being paid for a particular case. If the insurer decline the case or the client refuses to accept special terms despite not having alternatives available, I end up not being paid for my services despite putting in a lot of effort.

My advice on getting insured

This is what I urge people to do:

For healthy people, do not procrastinate anymore. Get an independent adviser who you can trust while you still have the luxury of choice. A person who even has an ostensibly minor health issue knows well the difficulties of obtaining insurance coverage. A person who knows this fact even better will be an adviser struggling to provide the best for his clients with pre-existing conditions.

For unhealthy people, this is a non-exhaustive list of things you can explore with an independent adviser:

  • applications with multiple insurers to pick best underwriting result;
  • seek alternative insurance solutions from general insurance industry;
  • get to know special forms of underwriting like Moratorium;
  • financial planning to prepare for self-insurance; etc.

Last but not least, consider paying your adviser a fee. Be realistic about the fact that nobody works for free and negotiate a fair fee depending on the complexity of your case. Otherwise, pay in kind by referring (and I mean really recommending business instead of just giving your friend’s number) quality business.

While I have enjoyed working and doing my best for my current clientele so far, I may have to start thinking about tweaking a bit of my business model in future as I become increasingly busy.

05/04/2012: This post has been featured in Yahoo Finance.

Thumbs up to keep me writing more!