What is underwriting in the context of health insurance?

The term underwriting is used to describe the process of assessing and evaluating the risk involved in insuring an individual or business. All health insurance policies will undergo a form of underwriting, but in this article, we look specifically at moratorium underwriting.

What is moratorium underwriting?

Moratorium underwriting is a type of private medical insurance underwriting that automatically excludes pre-existing conditions from the last five years for a set timeframe - typically two years - but may cover them thereafter. 

In essence, by categorically excluding pre-existing conditions from the past five years, the insurer removes the need to evaluate your medical history upfront. There are advantages and disadvantages with this which we’ll explain later in this article. 

While moratorium policies automatically exclude pre-existing conditions for the past five years, many will provide cover for those pre-existing conditions if you have been symptom-free for two years.

Benefits of moratorium underwriting

Some of the benefits of moratorium underwriting include:

  • Less paperwork - with moratorium underwriting you do not need to perform a medical questionnaire or undergo a medical examination to take a policy out. 
  • You’re not obliged to disclose everything - you don’t need to remember your medical history or risk invalidating your policy by forgetting something.
  • Lower costs- In many cases you can often get a cheaper policy under the moratorium system.
  • Shorter pre-existing conditions period - only conditions which occurred in the past five years are excluded. Fully medically underwritten policies often exclude conditions from any time in your past.
  • Cover for pre-existing conditions after 2-years - If you have a pre-existing condition and you have had no symptoms for 2 years, then it will usually be covered under your policy.

Disadvantages of moratorium underwriting

  • Automatic exclusion - any medical condition that occurred in the last five years will be automatically excluded.
  • Minor symptoms can lead to bigger exclusions - Minor symptoms could lead to a bigger exclusion on a moratorium policy. Fully underwritten policies may not consider the early symptoms of a disease to be significant.
  • The cover isn’t clear - You don’t have a clear list of what is and isn’t covered under the policy. In essence, you won’t know until you make a claim.
  • Two-year exclusion – pre-existing conditions won’t be covered for at least 2 years
  • Claim delays - as the insurer defers the medical assessment until the point of claim, you will often need to wait for them to assess your medical history before they agree to pay
  • Not everyone qualifies - not everyone can get a moratorium policy

Get advice on the right underwriting and policy

Choosing the right type of underwriting for your circumstances can be tricky, which is why it’s always best to seek independent advice from a trained specialist. If you need help navigating private health insurance please click this link and request a free quotation.

Alternatively, if you’d like to learn more about PMI before getting in touch, be sure to read our recent article “Best private health insurance UK” in which we review all of the leading providers.