Page 74 - MEDICAL AND HEALTH INSURANCE

MEDICAL AND HEALTH INSURANCE

CHAPTER 4: MEDICAL UNDERWRITING

INTRODUCTION

Underwriting can be defined as a process of determining whether to accept a risk and,
if so, what amount of insurance the company will write on the acceptable risk, and at

what rate. Underwriters are companies, individuals, or insurance companies that

carry on this critical activity for their own account or for that of others. Medical

underwriting also refers to the process by which a life or health insurer uses an

applicant's medical history to decide whether they can offer them a policy and
whether the policy will include pre-existing condition exclusions and/or a premium

that's higher than the standard rate.

4.1 CONSIDERATION

Consideration is one of the important elements in a policy contract. In insurance
contract, the consideration of the applicant consists of the statement made in the

proposal form and the payment of the appropriate premium. The consideration of the

Insurer is the promise to pay the benefits provided in the insurance policy.

Generally, an applicant must pay the initial premium, which is monetary
consideration, before the policy can be effective. Once the policy is enforced, the

Insurer requires the renewal premium to keep the policy in operation, failing which

the policy will lapse. The premium payment may be thought of as a continuing

consideration.

73 | P a g e