Posted on Jul 10, 2013 by Sergio Ulloa
's GlobalFusion plan will now allow clients to choose moratorium underwriting instead of only full medical underwriting with exclusions. Globalsurance experts view this as a good move for IMG, as one of the plan's main target markets is aimed at retirees, who have higher likelihood of pre-existing conditions. Retirees are likely to appreciate both the faster processing time and the higher likelihood of cover for pre-existing conditions.
The moratorium option is becoming more and more popular with insurers who are offering this service to clients. Insurers such as ALC and A Plus have already made the switch.
However, what exactly is moratorium underwriting and full medical underwriting (FMU)?
Both moratorium underwriting and full medical underwriting are ways for insurers to handle medical conditions that exist before a plan starts (pre-existing conditions, or pre-ex).
The word 'moratorium' means a suspension or a delay. In insurance, a moratorium is a period of time a client must be on the plan before an insurer considers pre-existing conditions
. The usual period is 24 months long.
After the 24 months, the insurer will consider providing cover for pre-ex if during this time there were no symptoms, treatment, special diet, or advice sought for morbidity. If any of the above actions were taken during the first 24 months, then another 24 months must be undergone from the last date of morbidity for the insurer to consider covering the condition.
Moratorium underwriting generally requires the client to complete considerably fewer (3-5) medical questions on their application. In some cases, no questions are required at all.
On the other hand, with full medical underwriting, any pre-existing conditions clients have prior to their application will be excluded from their coverage. When the client applies, he or she must complete a full medical examination and a questionnaire on their medical history. Some insurers may offer cover for pre-existing conditions found on the application with a medical loading (an increased premium as a percentage) to cover the additional risk, though this is not the case with IMG.
Having the moratorium available is seen as an extreme positive for fusion plans for two main reasons.
Firstly, it is easier to apply for. Since many clients in the target market age bracket have pre-existing conditions, plans with full medical underwriting plans have a lengthier application process - it's harder to get on the plan.
Secondly, plans with moratorium underwriting will offer the possibility of covering some conditions where previously they would have always been excluded. It increases the likelihood of coverage for some pre-existing conditions.
Not all high risk conditions are covered under a plan with moratorium underwriting however. Conditions that require continuous treatment, such as blood conditions or cancer, will be unlikely to be covered. Loading costs can be high in some cases for blood conditions, even up to 100% in extreme cases. That being said, the plans are likely to cover injuries or smaller risk conditions, which is fair for clients, as they receive coverage without having to pay for additional loading.
Moratoriums are becoming more prevalent on the market with insurers such as Globality health, ALC, and A Plus all offering options. With the policies becoming easier to process and the likelihood of higher coverage increasing, Globalsurance are eager to see the impact this will have on the market.