Health Insurance Center

Health Insurance Q & As

Question 1 of 1 in Underwriting Policies
What determines the cost of a health policy?
Most Group health insurance plans do not use underwriting for individual plan participants. Once the Group is offered health insurance coverage, individuals who are members of the group automatically qualify for the insurance (often with open enrollment periods to switch coverages at a particular time during the year).

In addition, Group plans are originally underwritten using the same criteria as Individual health insurance plans - the group as a whole is considered in an overall sense based upon the statistical composition of the individual group members. Typical underwriting criteria include:

1. Age - older people have a higher incidence of claims than younger people and require higher premiums for coverage

2. Number of people covered - whether coverage is offered solely to the individual or if coverage will also be extended to family members and dependents

3. Health history - primarily used in underwriting individual insurance plans, a history of disease or illness will impact whether a particular insurance company will offer insurance, and if so whether pre-existing conditions or other restrictions will be placed on such insurance

4. Occupation - some occupations involve more risk of injury or illness due to the nature of the work and thus require a higher premium

5. Lifestyle - whether a person smokes or engages in a hazardous hobby which exposes the individual to a greater degree of risk or disease, illness, or potential for accident.