Moratorium underwriting is a process by which insurers determine the terms of health insurance, where they exclude all pre-existing conditions from the last five years for a period of two years. After that, the list of pre-existing conditions is reconsidered, and insurance policy exclusions may change.
It is an alternative to full medical underwriting, where some pre-existing conditions are excluded permanently. A moratorium takes the recurrence of an illness into account, allowing for more flexibility in the coverage.
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What impact does moratorium underwriting have when you make a claim?
The insurer doesn’t have your full medical history, so anytime you make a claim, they will require further medical information to assess it. The assessment will be particularly thorough if the claim is made early in your policy. This is done to ensure that the claim has no relation to excluded pre-existing conditions.
Your doctor may have to confirm that before you joined the policy, you couldn’t have predicted that you might have the condition for which you’re claiming treatment. This is done to understand if your symptom or condition is new or pre-existing.
If the insurer initially excluded certain conditions from your policy coverage, you won’t be able to make claims for them for at least two years. Some medical conditions and related conditions (which continue or keep recurring) might not be claimed even after the underwriting period.
What is rolling moratorium medical underwriting?
Rolling moratorium coverage is given when you don’t need to seek health advice or receive treatment for the pre-existing condition for the entire qualifying period. If you are advised/treated within the two-year period, the date of your policy will be renewed. Some conditions that you always need to seek treatment for will never be covered under this method.
A rolling moratorium can be contrasted to a fixed moratorium, where the qualifying period doesn’t change regardless of what treatment, advice, or medication was received.
Will you have coverage for pre-existing conditions on moratorium underwriting?
If you had a pre-existing condition in the five years before the coverage started, it is excluded. Once you’ve been free from medication, treatment, diagnostic tests, or advice for the condition for two continuous years after your policy started, the exclusion will no longer apply.
Conditions like asthma or diabetes are likely to stay included. However, if you have had a serious illness that didn’t require any treatment recently, it will get covered. This is why you’re not permanently burdened by your past conditions. If you’ve been healthy for the last five years, the coverage will be fuller compared to other underwriting options.
Other underwriting options
Before you sign up for insurance with a certain underwriting option, make sure you understand what each term means. This is especially true if you’re new to private health insurance.
Full medical underwriting
Full medical underwriting requires the applicant to disclose their medical history in the questionnaire before the coverage is decided. Before any exclusions for pre-existing conditions are made, the insurance company will conduct a thorough analysis of all available records. Here, all previous conditions in the medical report are important, even those that were dealt with a long time ago.
If you have already been enrolled into an insurance policy under moratorium underwriting, you can be transferred from your existing scheme into a new underwriting period. The existing policy should be valid and have at least 12 months remaining till the expiration date.
Medical history disregarded (MHD)
This option effectively ignores the applicant’s pre-existing conditions. The policy will cover all conditions, regardless of when they arose or whether the person recently sought treatment for it. Typically, MHD is not available for personal coverage – it is more common in the larger corporate health insurance market.
Continued personal medical exclusions
CPME underwriting is offered to people who want to change insurance providers. The applicant supplies the new insurer with their most recent insurance certificate, and the insurer will decide if they want to continue it. Medical exclusions remain the same, but other policy terms and conditions may change.
Switch moratorium underwriting
If you want to switch providers, some companies will allow you to switch moratorium underwriting without taking out a new one. However, expect most insurers to have an age restriction, e.g., under “x” years old.
If your transfer is approved, the new insurer will take over the remaining period. When the two-year underwriting period is over, you can have a new start date for your policy. This is, of course, if you haven’t had symptoms, treatments, or advice for a specific pre-existing condition.
Pros & Cons of moratorium underwriting
Have you decided what you prioritise in private health insurance? The table below can help you with that.
|Lower costs||Automatic exclusion|
|Fast implementation||Longer claims process|
|Shorter pre-existing condition exclusion period||Advice and symptoms count|
|Relaxed duty of disclosure||Unclear coverage|
Advantages of moratorium underwriting
Here are the pros in more detail:
- Lower costs: For most people, the cost of private health insurance is the key factor when choosing a plan. The good thing is that a moratorium generally helps you get a more affordable policy.
- Fast implementation: You skip the examination process and avoid most of the paperwork.
- Shorter pre-existing condition exclusion period: You don’t need to worry about conditions and illnesses from many years ago.
- Relaxed duty of disclosure: You don’t have to disclose your full medical history.
Disadvantages of moratorium underwriting
Here are the cons in more detail:
- Automatic exclusion: There is no leeway in which conditions from the past five years are excluded.
- Longer claims process: The assessment process will take longer since the issuer doesn’t have your medical history.
- Advice and symptoms count: Even diagnostic tests and medications can affect your policy.
- Unclear coverage: You may not be sure exactly what you’re covered for and could find yourself undergoing expensive treatment.
Which method is right for me?
Below are three scenarios and suggestions for each:
- It’s your first private medical insurance: Moratorium underwriting and full medical underwriting are both suitable. Pick between them based on your individual medical history.
- You’re switching from another provider: Moratorium underwriting and full medical underwriting are both suitable. The insurer will treat it as if you’re taking insurance out for the first time. Continued personal medical exclusions may work if you want to modify the coverage.
- You’re transferring from a group medical insurance plan: Continued personal medical exclusions may impose additional expenses. Choose continued moratorium if possible.
Should you consider a moratorium policy?
Moratorium underwriting is not for everyone, but it wasn’t intended to be. There are specific groups of individuals that will get the most value out of it in their circumstances.
Moratorium policies work best for people who:
- Are in good health: Specifically, a good medical record for the last five years.
- Want to speed up the underwriting process: No medical declaration or examination.
- Have older medical conditions: After five years, they can be included in the policy.