Insurance Underwriting Process: How Does It Work? [2023]

Insurance Underwriting Process: How Does It Work?

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insurance underwriting process singapore

Have you ever wondered how insurance companies determine whether or not to provide coverage to individuals or businesses?

The answer lies in the insurance underwriting process.

This crucial step helps insurers assess risk and set premiums, ensuring that they can provide financial protection to their policyholders.

Understanding the insurance underwriting process is essential for anyone looking to purchase insurance or work in the insurance industry.

By the end of this post, you will have a comprehensive understanding of the insurance underwriting process and its importance in the insurance industry.

Whether you are seeking personal insurance coverage or interested in a career in insurance, this knowledge will empower you to make informed decisions and navigate the insurance landscape with confidence.

So, let’s dive in and explore the fascinating world of insurance underwriting.

What is Insurance Underwriting?

Insurance underwriting is the process by which insurance companies evaluate the risk involved in providing coverage to potential policyholders.

The primary objective of underwriting is to assess the likelihood of the insured event occurring and to determine whether the risk is acceptable for the insurer.

During the underwriting process, various factors are considered, such as the individual’s medical history, including any pre-existing conditions such as heart disease, blood pressure levels, and family medical history.

Other aspects that affect the evaluation of risk include a person’s lifestyle choices, such as alcohol consumption, as well as their credit score and history.

Insurance underwriters carefully analyse all the gathered information to determine the type of life insurance policy, coverage amount, and premium rates that are suitable for the applicant.

This evaluation allows insurance companies to offer competitive and profitable insurance products that benefit both the policyholder and the insurer.

Underwriting can involve reviewing a wide range of information, including medical records, conducting medical exams if necessary, assessing motor vehicle reports for a poor driving record, and examining prescription and credit histories.

Additionally, underwriters may review public records and consult with insurance agents to obtain a comprehensive perspective on the risk associated with the applicant.

Why is underwriting important?

Underwriting plays a crucial role in the insurance industry as it establishes coverage certainty and determines the price of insurance.

It involves assessing the risk associated with an applicant and influences the amount of premium they will have to pay.

Insurance underwriting allows insurance companies to carefully evaluate an individual’s risk factors, such as their medical history, lifestyle choices, and credit score.

By analysing these factors, underwriters can determine the type of coverage that is suitable for the applicant and the premium rates that should be charged.

Through underwriting, insurance companies can assess the likelihood of a claim being made and the potential costs that may arise from it.

This enables them to set appropriate premium amounts that reflect the level of risk involved.

This way, underwriting ensures that insurance remains fair and affordable for both the policyholder and the insurer.

Moreover, underwriting helps insurance companies maintain profitability by ensuring that the premiums collected adequately cover any potential claims.

It allows insurers to allocate resources efficiently and effectively, ultimately contributing to the financial stability of the industry.

Is underwriting always needed?

While underwriting plays a crucial role in the insurance industry, there are certain circumstances where it may not be necessary.

For individuals in poor health or with pre-existing medical conditions, insurance companies offer “guaranteed issue” policies meant for those with pre-existing conditions.

These policies do not require underwriting and are suitable for those who may have difficulty obtaining coverage through traditional underwriting processes.

On the other hand, for individuals in good health and qualify for most standard policies, they may require underwriting.

There are also standard policies that offers guaranteed issuance, which is commonly seen in endowment plans, annuities, and investment plans.

Types of Insurance Underwriting

When applying for insurance, it’s important to understand that there are different types of underwriting processes that insurance companies use to evaluate risk and determine coverage.

1) Financial Underwriting

Financial Underwriting is a key component of the life insurance application process.

It involves evaluating an applicant’s financial status to determine the risk associated with insuring them and to set appropriate premium rates.

During the financial underwriting process, insurance companies carefully assess various financial documents to get a complete picture of the applicant’s financial situation.

These documents typically include bank statements, tax returns, investment portfolios, and employment records.

By examining these documents, underwriters can evaluate an applicant’s income, assets, debts, and overall financial stability.

The purpose of financial underwriting is to assess an applicant’s ability to pay premiums and also to estimate the risk of insuring them.

Factors such as income, debt-to-income ratio, and credit history are considered in determining the applicant’s financial risk.

This information helps insurance companies determine the appropriate premium rates for the applicant.

The financial underwriting process is crucial in ensuring the financial viability of the life insurance policy for you.

It helps the insurance company assess the risk associated with insuring an applicant and ensures that the premiums charged are appropriate given the individual’s financial situation.

Ultimately, financial underwriting helps protect the company’s financial integrity while providing the applicant with the coverage they need.

2) Medical Underwriting

Medical underwriting is an essential part of the insurance underwriting process and involves evaluating an individual’s health and medical history to assess their risk profile.

During medical underwriting, insurance underwriters carefully review medical records, including doctor’s prescriptions, diagnostic test results, medical examination reports, and family medical history.

The primary purpose of medical underwriting is to determine the applicant’s health condition and the risk associated with it.

Underwriters pay particular attention to pre-existing diseases or medical conditions that the applicant may have.

These can range from chronic illnesses such as diabetes or heart disease to mental health conditions or prior surgeries.

Diagnostic test results and medical examination reports also play a crucial role in medical underwriting.

These tests can provide valuable information about an applicant’s current health status and help underwriters assess their risk level.

Additionally, underwriters take into account the applicant’s family medical history, as certain genetic factors may increase the risk of developing certain diseases or conditions.

Here’s our guide to how these factors affect your insurance premiums.

This information helps underwriters understand the potential health risks an applicant may face in the future.

By carefully evaluating all of these factors, insurance underwriters are able to determine the individual’s risk profile and make informed decisions regarding their application for insurance coverage.

Types of Insurance Policies & How It’s Underwritten

Life Insurance Policies

Life insurance policies provide financial protection and peace of mind for you and your loved ones.

There are different types of life insurance policies that cater to your unique needs, and the underwriting process plays a crucial role in determining your coverage & premiums.

Traditionally underwritten policies involve a thorough assessment of your health and medical history.

You will be required to complete a health questionnaire and even undergo a detailed medical exam.

This process enables insurance companies to evaluate your risk profile and determine the appropriate premium rates.

However, if you prefer a simpler and faster process, there is an alternative option called accelerated underwriting.

With accelerated underwriting, you can obtain life insurance without a medical exam.

This option is convenient, but it typically comes with higher costs and lower death benefit limits.

During the underwriting process, several factors are taken into consideration.

These include your medical records, family medical history, lifestyle choices such as alcohol consumption, credit score, and driving record.

The goal is to assess your overall health and lifestyle risk factors to accurately determine your insurability and assign an appropriate risk class.

Health Insurance Policies

When it comes to health insurance policies, there are different types and underwriting processes to consider.

During the underwriting process, insurance underwriters take into account several factors.

These include your medical history, current health condition, and any pre-existing conditions you may have.

They assess your risk profile based on these factors and determine the appropriate premium rates.

There are various types of health insurance policies available.

Individual health insurance policies are purchased by individuals to cover themselves and their families.

These policies require underwriting to evaluate the individual’s health and determine the premium rates.

What do insurance underwriters look for?

Medical History and Family Medical History

When it comes to the insurance underwriting process, your medical history and family medical history play a crucial role.

Insurance companies consider these factors as they assess the risks associated with providing you with a policy.

Your medical history, which includes previous illnesses, surgeries, and ongoing medical conditions, helps underwriters determine the likelihood of you developing future health issues.

Similarly, your family medical history provides insights into hereditary health conditions that may affect you.

These factors can have a significant impact on the type of insurance policy you can obtain and the rates you may be offered.

If you have a clean bill of health, you are likely to be eligible for standard insurance policies with lower rates.

However, if you have a medical history with conditions such as heart disease, high blood pressure, or other health risks, you may be considered a higher risk and may need to pay higher premiums or have certain exclusions in your policy.

Underwriters look for key risk factors and medical conditions when reviewing your medical history.

These may include chronic illnesses, tobacco use, alcohol consumption, and mental health conditions. By analyzing your medical history, underwriters assess the likelihood of you filing a claim and adjust the premiums accordingly.

Blood Pressure and Heart Disease Risk Factors

During the underwriting process, insurance underwriters carefully consider risk factors related to blood pressure and heart disease.

These factors can have a significant impact on the premiums and terms of a life insurance policy.

High blood pressure, also known as hypertension, is a common risk factor that underwriters assess.

This condition can increase the likelihood of developing heart disease, stroke, and other cardiovascular complications.

Underwriters also analyse your history of heart disease, including any previous diagnoses, surgeries, or treatments.

Other risk factors include cholesterol levels and diabetes.

High cholesterol levels are associated with an increased risk of heart disease, while diabetes can lead to various health issues, including cardiovascular problems.

The presence of these risk factors may result in higher premiums or even exclusions in your life insurance policy.

Underwriters consider the potential for future health complications when determining the level of risk you pose as an insured individual.

Alcohol Consumption and Drug Use Habits

Alcohol consumption and drug use habits have a significant impact on the insurance underwriting process.

When assessing an applicant’s risk level, underwriters take into account their history of alcohol consumption and drug use.

Excessive alcohol consumption can lead to a range of health issues, including liver disease, heart problems, and mental health disorders.

Similarly, drug use habits, especially illicit drugs, can have detrimental effects on a person’s overall health and well-being.

These factors play a crucial role in determining an individual’s risk profile and can directly impact the premium rates they are offered.

Applicants with a history of alcohol or drug abuse may be considered higher risk and therefore face higher premiums or even be denied coverage.

Therefore, it’s essential to provide accurate information about your alcohol consumption and drug use habits during the underwriting process.

Transparency is key in ensuring fair evaluation and obtaining the most accurate premium rate based on your risk profile.

Credit Score and Credit History Evaluation

When applying for a life insurance policy, one aspect that insurance companies consider is your credit score and credit history.

These factors are important for insurance underwriters to assess your financial stability and determine the risk associated with insuring you.

Credit score and credit history provide valuable insights into your ability to manage your financial obligations.

A high credit score and a positive credit history indicate responsible financial behavior and make you a more attractive candidate for insurance coverage.

On the other hand, a low credit score or a negative credit history may raise concerns about your ability to make premium payments on time.

Factors that can negatively impact your creditworthiness include bankruptcy, large debts, and missed payments.

Insurance companies interpret these as signs of financial instability, which may result in a less favourable risk classification.

This means you may be placed in a higher risk category, leading to higher life insurance premiums.

It’s crucial to maintain a good credit score and a positive credit history, as they not only affect your ability to secure favorable loan terms but also play a role in determining your life insurance premiums.

By demonstrating financial responsibility, you can improve your chances of obtaining affordable life insurance coverage.

Age and Gender Considerations

When it comes to insurance underwriting, age and gender are 2 important considerations that can significantly impact the process and the resulting premiums.

Insurance underwriters carefully examine these demographics to assess the risk associated with providing coverage.

Age plays a crucial role in insurance underwriting.

As we grow older, the risk of developing certain health conditions increases, making us more prone to illness or medical emergencies.

Underwriters take into account age-related risk factors such as the likelihood of developing chronic diseases or medical conditions.

Additionally, older individuals may have a shorter life expectancy, which can also impact the premiums they are offered.

Gender is another factor that insurance underwriters evaluate during the underwriting process.

Statistics show that men tend to have higher mortality rates compared to women.

This means that insurance companies may perceive men as having a higher risk and may adjust premiums accordingly.

Various factors contribute to these differences, including biological factors and lifestyle choices.

In health insurance, women will usually have to pay higher premiums as they have longer lifespan than men.

This puts additional risk to the insurer as the older you are, the higher your chances of making a claim.

How Long Does Underwriting Take?

The duration of the underwriting process can vary depending on the type of policy you are applying for and your individual circumstances.

In general, standard underwriting for insurance policies typically takes around 1 to 6 weeks.

During this time, the insurance company will review your application, medical history, and any other relevant information to assess your risk profile.

However, if you have minimal health issues and meet certain criteria, you may be eligible for accelerated underwriting.

This expedited process can significantly reduce the time it takes to get approved for a policy, sometimes as quickly as a few days or weeks.

To streamline the underwriting process and ensure you get the best coverage, it’s beneficial to work with an agent who personally knows the insurer’s underwriters or have connections to pull.

They will guide you through the application process, help you gather the necessary documentation, and provide expert advice.

With their assistance, you can navigate the underwriting process more efficiently and get the insurance coverage you need in a timely manner.

Life insurance medical underwriting step by step

Step 1: Application

When applying for life insurance, the first step is to complete the application form.

This is a crucial step in the underwriting process as it provides insurance companies with essential information about you.

It is important to carefully fill out the proposal form, ensuring accuracy and completeness.

The application form will ask for personal details such as your name, address, date of birth, and contact information.

Additionally, you will be required to provide information about your medical history, including any pre-existing conditions or recent surgeries.

Lifestyle details such as smoking habits, alcohol consumption, and exercise routine will also be requested.

Once the application is submitted, it undergoes a quality check by the insurance company.

Step 2: Intial review by underwriters

After you submit your insurance application, it goes through an initial review process conducted by underwriters, which is an important step in the insurance underwriting process.

During this stage, underwriters carefully evaluate your application to determine the level of risk associated with insuring you.

The initial review involves a thorough evaluation of the application to ensure that all the necessary information has been provided.

Underwriters meticulously check for any gaps or missing information that could affect the accuracy or completeness of the application.

They pay close attention to details such as your personal and contact information, medical history, lifestyle habits, and financial stability.

Identifying any inconsistencies or missing information is crucial during the initial review, as it can cause delays in the underwriting process.

Underwriters strive to ensure that all the information provided in the application is clear and consistent, allowing for an accurate assessment of risk.

Once the initial review is complete and any gaps or missing information have been addressed, your application enters the official underwriting phase.

Step 3: Risk Assessment

In this phase, underwriters will classify you based on the factors mentioned above.

From here, the underwriters will assign you to a risk class such as preferred plus, preferred, standard, or substandard (internally, you won’t actually know this).

Applicants with excellent health may qualify for the preferred plus or preferred classes, which offer lower premiums.

On the other hand, individuals with significant health issues may be placed in the substandard class, resulting in higher premiums.

Step 4: Medical Examination

Not everyone will have to undergo this step. If you’re in the preferred class, the underwriters will push you to Step 6.

However, if you’re in a higher risk class, they might require you to undergo a medical examination via their assigned doctors.

A licensed healthcare professional will conduct the examination and evaluate various factors such as height, weight, blood pressure, and medical history.

These basic measurements help underwriters gauge an applicant’s overall health and identify any potential risk factors.

The underwriter carefully evaluates the results of the medical examination to determine the applicant’s insurability and life insurance rate.

If an applicant’s height and weight fall within a healthy range, it generally indicates good overall health.

However, if an applicant has high blood pressure, it may signify an increased risk for cardiovascular issues.

In addition to the medical examination, underwriters may also consider other factors during the medical underwriting process.

This may include conducting a check with the Ministry of Health (MOH) to verify the accuracy of an applicant’s medical history.

Step 5: Specialist Reviews

Underwriters may request specialist reviews to gather additional information about an applicant’s medical condition.

These specialist reviews provide crucial insights into specific health concerns, helping underwriters make informed decisions about insurance coverage.

Underwriters may require specialist reviews when an applicant has a complex medical condition that requires in-depth evaluation.

By consulting with various specialists, underwriters gain a more comprehensive understanding of the applicant’s specific health risks.

There are several types of specialists that may be involved in the review process.

For example, if an applicant has a heart condition, a cardiologist may be consulted to assess the severity and potential impact on insurability.

In cases of a history of cancer, a oncologist may be contacted to evaluate the current status of the disease and the likelihood of recurrence.

Other specialists that may be involved in the review process include neurologists for neurological conditions, endocrinologists for diabetes or hormonal disorders, and pulmonologists for respiratory conditions.

By consulting with these specialists, underwriters can gather additional information and expert opinions to accurately assess the applicant’s medical condition.

Step 6: Determine Premiums and Terms

Once the underwriting process for your life insurance application is complete, the underwriters will assess the information gathered to determine the premiums and terms of your policy.

This step is crucial as it directly impacts the cost and coverage of your insurance.

Step 7: Approval, Modification, or Decline

Once all the necessary information has been gathered and verified, the underwriter moves on to Step 7 of the insurance underwriting process: Approval, Modification, or Decline.

In the case of Approval, the underwriter determines that the applicant meets all the necessary criteria and is eligible for coverage.

The terms and premiums are then established based on the risk assessment.

Sometimes, the underwriter may find certain aspects of the applicant’s profile that elevate the risk level.

In such cases, they may offer a Modification to the policy, adjusting the terms, coverage (such as exclusions), or premiums accordingly.

This ensures that the risk is adequately managed.

However, in some instances, the underwriter may determine that the risk presented by the applicant is too high, making it necessary to Decline coverage. T

his means that the insurance company is unable to offer a policy due to the assessed risk.

The final decision of Approval, Modification, or Decline is based on a thorough evaluation of the applicant’s profile and the underwriter’s assessment of risk.

How can you get a lower life insurance premiums?

When it comes to securing a lower life insurance rate, there are several factors that can be within your control.

By making healthy lifestyle choices and maintaining good habits, you can potentially lower your insurance premium.

Firstly, adopting a healthy diet and engaging in regular exercise can have a positive impact on your overall health.

By maintaining a healthy weight range, you can reduce the risk of developing medical conditions such as heart disease or high blood pressure, which are often considered risk factors by life insurance companies.

Moderating your alcohol consumption is also important.

Excessive drinking can negatively affect your overall health and increase the risk of liver disease and other medical conditions, which can impact your life insurance rate.

How claims affect your future underwriting?

When applying for insurance, it’s important to understand how claims can impact your future underwriting, especially if you’re on a renewable and claims-based policy.

Insurance companies take past claims into consideration when evaluating risk and determining premiums for your policy.

If you have a history of frequent or substantial claims, it may indicate a higher risk of future claims.

This can result in higher premiums or even a denial of coverage after the policy term ends.

On the other hand, if you have a clean claims history, it can demonstrate your lower risk profile, leading to more favorable premium rates.

Factors that insurance underwriters consider when evaluating the impact of claims on future underwriting include the type and frequency of claims, the amount of the claims, and the circumstances surrounding them.

For example, multiple claims for serious medical conditions or accidents may raise concerns about your health or lifestyle choices, potentially leading to higher premiums.

What happens if I fail underwriting?

Firstly, your application may be rejected by the life insurance company.

This means that you will not be able to secure a life insurance policy with that particular insurer at that time.

The rejection could be due to various reasons, such as a high-risk medical condition, a dangerous occupation, or a history of risky activities.

However, a rejection does not necessarily mean the end of your pursuit for life insurance coverage.

In some cases, the insurance company may offer you a counteroffer, which could include a higher premium rate or reduced coverage.

Alternatively, they may suggest a postponement, where they delay the decision on your application until a later date, allowing you time to make necessary changes to improve your risk profile.

If none of the above is applicable, you will have to look at other insurers who are open to insuring you based on their risk assessment of you.

As a last resort, you can look for insurance policies that are meant for those with pre-existing conditions.

Based on our team’s discussions with our partnered financial advisors, there are times where they fought for their clients to get their policies underwritten with no additional loading or exclusions with high success rates.

However, this will only work if your agent has direct relationships with the underwriting team or have connections to help you do this.


The medical underwriting process is a testament to the meticulous attention and care that insurance companies invest in evaluating potential policyholders.

While it might seem daunting, this process ensures that each individual receives a policy tailored to their unique health and lifestyle profile, balancing risk for both the insurer and the insured.

If you’re contemplating getting a health or life insurance policy and are unsure about navigating the complexities of the underwriting process, professional guidance can be invaluable.

Remember, making informed decisions about your insurance needs is crucial for your financial well-being.

Why Trust Us?

At Dollar Bureau, we’re committed to providing you with reliable, unbiased financial guidance. Our content is crafted by everyday Singaporeans who are trained in finance and insurance, ensuring relatable and practical guidance. We uphold strict editorial independence, regularly update our reviews, and value your feedback to keep our information accurate and relevant.

Discover more about our editorial guidelines here.

Firdaus Syazwani
Firdaus Syazwani
Twenty years ago, Firdaus's mother bought an endowment plan from an insurance agent to gift him $20,000. However, after 20 years of paying premiums, Firdaus discovered that the policy was actually a whole life plan with a sum assured of $20,000, and they didn't receive any money back. This experience inspired Firdaus to create, so that others won't face the same problem of being misled or not understanding what they are purchasing – which he sees as a is a huge problem in the industry.

Disclaimer: Each article written obtained its information from reliable sources and should be purely used for informational purposes only. The information provided by Dollar Bureau and its affiliated parties is not meant to be construed as financial advice. Dollar Bureau shall not be held liable for any inaccuracies, mistakes, omissions, and losses incurred should you act upon any information listed on this website. We recommend readers to seek financial planning advice from qualified financial advisors. 

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