The Underwriting Process in Long Term Care Insurance

Underwriting in long term care insurance is important for the companies to assess whether or not the applicant deserves to receive coverage. This is a two-way relationship between the policyholder and the company; the former pays the premiums and accept the risks while the latter will pay out claims.

Why underwriting crucial

State insurance laws require that all individual policies be fully and medically underwritten. The insurance company must verify, through any legal means, the entire applicant’s information including the medical history, lifestyle, and potential impairment prior to issuing the policy. This is necessary to protect both parties.

Primarily, this protects the insurance companies from fraud wherein applicants fabricate information for them to take advantage of the coverage and mislead the insurer from providing claims. The company can freely deny claims from a policyholder who intentionally withheld any information that would have affected the policy.

On the other hand, underwriting protects the policyholders in general. The price of premiums is affected by how much money the insurance expects to pay out for long term care insurance claims. The higher the amount the insurance carries divvies out for claims, the pricier the premiums become. This protects the company from future losses, while maintains the affordability of premiums for the policyholders. To avoid risks, financial companies ensure to sort only the insurable and prevent those with serious medical condition from accessing the insurance pool.

How is it employed?

The first step is the issuance of the application form fully filled-out by the applicant that lists all his or her personal health history and other information. This also allows s the insurance company to verify the information and investigate on the medical records.

The carrier will then schedule a phone interview with the applicant for about 5 to 20 minutes. This can help the carrier determine if the applicant has no cognitive impairment that may be found evidential on the manner he or she participates in the interview. The company can also conduct personal or phone interview with a nurse or doctor who knows the applicant’s health and lifestyle very well. In the interview, the company will, as much as possible, scrutinize if the applicant’s statement matches with the nurse or doctor’s declaration.

The next step is the issuance of the requested copy of the applicant’s medical records to verify his or her overall health. If the applicant had serious illness in recent years but is now treated, the company will request for those records. Usually, this process lengthens the underwriting procedure because it could take few weeks to get all the medical records from the doctor’s office. Once the carrier receives the medical records, the final underwriting decision is given quickly.

Now, there’s no reason for you detest the underwriting policies of insurance companies because it is designed not only to benefit the carrier but protect all policyholders as well. Another realization hit: having a reasonably good health can help you pass through underwriting process easily.

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