Underwriting is a complex process and varies between underwriting a policy for a specific individual and for a group of individuals. In the case of a single individual the underwriter is considering the risk to the insurance company in providing cover for that individual in the light of such things as the individual's age, lifestyle, current state of health and medical history. In the case of a group however, because the risk is being spread across a number of individuals, the underwriter will not normally consider individual cases but will simply look at the historical risk to the company from insuring similar groups.

For this reason, it is often cheaper for an individual to obtain cover through a group scheme than on their own, especially if their medical history or current state of health would normally give rise to exclusions or a loading on their premium.

Assuming however that the option of joining a group scheme is not open to you and that you need to apply for your own individual policy, where do you stand in terms of underwriting?

The starting point for the process is your application to the insurance company for cover. The application form is normally quite straightforward and you will be required to provide some basic information about yourself such as you name and address, date of birth, social security number, dependent status and place of work. You may also be asked to provide some basic information about the nature of your work and possibly about both your earned and unearned income. The exact nature of these questions will vary from one company to the next.

You will then be asked a number of questions about your lifestyle and your own health, as well as possibly that of your family. These questions might include such things as whether or not you smoke, how much alcohol you consume, how regularly you exercise, whether or not you have a family history of certain medical problems and a variety of other questions. In some cases the insurance company may also request that certain medical questions be answered by your physician.

This is an important element of the application form and one over which you have a certain degree of control. For example, knowing that your lifestyle will affect your eligibility for cover, and the cost of cover, provides you with the opportunity to think ahead and consider reducing some of your bad habits in advance of applying for health insurance.

You should also bear in mind however that it is extremely important that you complete your application form fully and truthfully. Giving up smoking the day before you apply for health insurance is not likely to help greatly, if at all, but extending this on your application form to read one year instead of one day will get you into very hot water!

It is also worth remembering that, while insurance companies do have a great deal of say in the cover that they will provide, they also have to act within the law and this, for example, prohibits them from making underwriting decisions based on such things as an individual's marital status, sexual preference, genetics or certain physical disabilities including vision and hearing impairment.

Underwriting is designed to protect the insurance company but, just as important, it is also designed to protect individual policyholders and to keep insurance costs as low as possible by applying standards fairly across all of the health insurance company's customers.

Obtaining low cost high benefit health insurance is not that difficult in most cases and understanding how an insurance company determines its rates can certainly help.