Underwriting disability cover is strict, right?

By Dennis Booysen - Head of Underwriting

Many people wrongly believe the disability underwriting disability cover is an overly strict process. FMI’s straight-forward underwriting process is designed with our clients’ needs in mind and we ask for as little as possible or as much as necessary to ensure claim certainty. This month, FMI’s Head of Underwriting answers some of your underwriting questions.

1. Isn’t all underwriting the same?
Many people believe that disability underwriting is the same as Life underwriting but this is not so. Life underwriting is a much easier process as the underwriter only has to determine if the client has a life-threatening pre-existing condition. The client will either qualify for Life cover or not.

Disability underwriting requires that the underwriter take into account a vast number of possible disability insurance claim scenarios and conditions. And, each of these conditions must be evaluated along with the individual applicant’s state of health and occupation. Red flags in disability underwriting include musculoskeletal complications, particularly the spine and joints, as well as psychological disorders, and abnormal blood results. These conditions are particularly difficult to quantify and evaluate at underwriting stage. The same is true at claim stage. Claiming on a Life policy is relatively straight-forward; claiming on a disability policy requires greater proof.

2. Why does FMI underwrite at application stage?
FMI is committed to claim certainty – in 2011, we paid 98% of all valid Temporary Income Protection claims. Claims experience determines underwriting standards, and FMI’s underwriting philosophy is to improve claim certainty by underwriting at application stage with an appropriate assessment and result. Our superior claims record is ensured through careful, upfront underwriting, avoiding any unpleasant surprises at claim stage.

3. How does FMI’s underwriting process work?
FMI have a simple and streamlined underwriting process:

• Complete the quote (which applies FMI’s unique risk assessment model)
• Fill out the application online or select tele-underwriting (completed by a qualified underwriter)
• Provide financial verification of income where required
• Complete required lab work (Travelling nurse services available through FMI)

Our new online application form is designed to save you and you client valuable time and effort:

• Required information reduced by 50%
• Clear and simple Occupation Duties
• Reduction in standard medical requirements for PIP
• Focus on blood profile and Short Medical Report (SMR)
• Improved non-medical limits (no doctor medicals) and reduced blood tests
• Reduced SMR questions and abbreviated Short Medical Report Abbreviated (SMRA)
• Nurses will now complete the medical questionnaires as part of the nurse service

Less capture upfront and less required information means that there will be fewer delays in obtaining missing information and the application will proceed to Underwriting faster.

4. What can the client do to help the process?
Where we don’t have enough information, we are forced to make conservative decisions. Disability insurance applications take into account the client’s medical history and the more details provided to the underwriter up-front, the less investigation for the underwriter, and the faster the process. Supplying as much information as possible will help to ensure a fair underwriting decision.

5. Is it easier to qualify for temporary than permanent income protection?
When it comes to underwriting, standard medical requirements are similar for both Permanent Income Protection and Capital Lump Sum Disability, while Temporary requirements are very basic with HIV testing being the only requirement. These basic requirements work hand in hand with our straightforward products, such as Express Income, a fast and efficient way to obtain temporary income protection that still expresses our commitment to claim certainty.

Both product types will attract the same loading or exclusion clauses but our research shows that the likelihood of a valid temporary income claim is much more likely than a permanent income so temporary income protection should be the first consideration for a new client.

6. Why are some applications declined?
While the majority of applicants are accepted on standard rates, certain individuals might not qualify for cover. Examples include individuals who refuse to comply with medical directives, are self-treating and medicating, or individuals with:

• Material and unexplained symptoms (undiagnosed), untreated disorders, or abnormal diagnostic test results
• Conditions or disorders restricting or limiting occupational duties
• More than three pre-existing conditions
• Disabilities lasting six months or more within three years of application
• Recommended, contemplated, or pending surgery
• Pending diagnostic evaluation
• Severe chronic disorders e.g. heart attacks, strokes, complicated diabetes, depression etc.
• Hazardous work or  travel conditions

Individuals who do not qualify for standard rates might still qualify for some form of cover through special terms such as loading, reduced benefit, or some other policy modification.

While, at first glance, the underwriting process might seem strict, FMI is committed to finding the best possible solution for your client’s income protection needs. To discuss individual cases or get more information, speak to one of our experienced Underwriters today.