SINGAPORE – What kind of criteria do insurers consider before granting life insurance coverage, and how do they decide whether to charge a high premium or not? How do they go about considering exclusions and limits to policies? And how do they assess medical histories and the chances of applicants claiming against the policy?

A new guide aims to help consumers find answers to these questions and better understand the medical underwriting process.

Launched on March 15 at the annual luncheon of the Life Insurance Association, Singapore (LIA Singapore), the LIA Guide To Medical Underwriting For Life Insurance is available on the association’s website.

The guide includes 10 case studies to illustrate how the underwriting process works when an applicant has asthma, hypertension and high cholesterol, diabetes or cancer, or is on the autism spectrum, among other conditions.

In one case, a 37-year-old man has been seeing a psychiatrist for two years over his anxiety disorder. He has a body mass index of 23, does not smoke and has not taken any medication to manage his condition for a year.

This information is, simply, not enough.

The insurer requires a medical report from the man’s attending doctor that shows he has exhibited no symptoms for the past year, even if he still has to have regular follow-up sessions with his doctor.

If there is a chance he might relapse, the insurer might not offer hospitalisation cover, and total and permanent disability cover may be offered at a higher premium.

Since the impact of mild anxiety disorder in this case on life and critical illness coverage is low, coverage can likely be offered with favourable terms, according to the guide.

The process is clear, but each insurer has their own underwriting guidelines and risk appetite. Hence, the underwriting outcomes may differ, the guide said.

LIA Singapore said the guide would help clear up some misconceptions that the public, including special needs groups, might have about being excluded from certain policies.

One of the case studies included in the guide involves a 19-year-old non-smoker on the autism spectrum, who is at school and has a healthy body mass index of 21.

As he is still seeing a doctor, insurers would require a medical report from the attending doctor, a school report and a medical questionnaire on his condition before deciding how to insure him.

He can be granted four types of insurance – life, critical illness, total and permanent disability, and hospitalisation – without having to pay extra premiums, if the reports show his need for support is minimal, and he has no other impairments or medical conditions and can live independently.

“We specifically wanted to put in (the guide) case studies, because people always say, what happens if I have hypertension, cancer, autism?” said LIA Singapore president Dennis Tan.

Health insurance helps pay for medical expenses when you fall ill, get injured or become disabled.

All Singaporeans are covered under MediShield Life, a basic government health plan that helps them pay large bills in subsidised B2 and C wards.

Integrated Shield Plans (IPs) and riders provide additional coverage on top of MediShield Life for those who may wish to stay in private hospitals, or A or B1 wards in public hospitals.

Mr Tan said at the launch that there was a 1.9 per cent rise in the total sum assured in 2023, reaching $145.5 billion.

Approximately 60,000 more Singaporeans and permanent residents were covered by IPs at the end of 2023 than in the year before that.

In total, 2.93 million lives – approximately 70 per cent of all Singapore residents – are protected by IPs and IP riders.

LIA Singapore also said it will launch an enhanced protection gap calculator in the coming weeks to help consumers find out if they have sufficient insurance coverage.

The guide comes amid rising healthcare costs as Singapore rapidly ages.

Health Minister Ong Ye Kung said during the debate on his ministry’s budget on March 6 that recommendations by a panel reviewing the mandatory MediShield Life insurance scheme are expected by the second half of 2024.

When more people have medical conditions than not in the insurance pool, the overall insurance cost to policyholders increases, according to the guide, making risk assessment crucial to ensure sufficient funds exist to pay the anticipated claims.