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Medical ratings explained
Several different rating approaches can be applied to cases depending on the type of cover applied for (e.g. life cover, specified illness cover, income protection) and the severity and prognosis of the individual impairments of customers. 90-92% of cases are accepted at normal rates, 6-8% are accepted at special terms and 2% are postponed or declined. Other than acceptance at normal rates, the main decisions that Irish Life underwriters can follow are outlined below.
Rating
A rating is where an additional amount is added to the policy premium because the risk is considered to be higher than that assume when quoting the basic premium.
Extra premium ratings
Extra premium ratings are applied to reflect the long term additional risk of a medical impairment or combination of medical risks. The range of extra premium loadings that can be applied can depend on the type of cover applied for:
Life cover – extra mortality loadings from a minimum of +50% (i.e. 1.5 times the standard cost of life cover premium) up to +400% (i.e. 5 times the standard cost of life cover) can be applied.
Specified illness cover – extra morbidity loadings from a minimum of +50% (i.e. 1.5 times the standard cost of specified illness cover) up to a maximum of +150% (i.e. 2.5 times the standard cost of specified illness cover) can be applied.
Income protection - extra morbidity loadings from a minimum of +50% (i.e. 1.5 times the standard cost of income protection) up to a maximum of +150% (i.e. 2.5 times the standard cost of income protection) can be applied.
Per mille ratings
The circumstances in which per mille ratings are applied are:
- Where there is a very high short term medical risk, for example a recent history of cancer. A sum assured of €100,000 might be rated at €5 per mille for three years. The additional premium would be €100,000 x 5% equalling an extra €500 per month for the first three years, reducing to the standard premium rate thereafter.
- To reflect the additional risk associated with certain occupations, hobbies or foreign travel, for example €250,000 life cover for a person working as a scaffolder at heights over 40ft, might be rated at €1 per mille. The additional premium will be €250,000 x 1%, equalling an extra €250 premium per annum.
Other rating terms
Exclusion – an exclusion means that the client will not be covered for a specific condition, e.g. a cancer exclusion on specified illness cover or a back exclusion on income protection. It is not our standard practice to apply exclusions to life cover.
Postpone – Cover may be postponed if your client is currently undergoing investigations or awaiting a referral. In these situations we need to await the outcome of the investigations. Cover may also be postponed if the client has recently suffered a serious medical event, for example a heart attack or cancer.
Decline – In some cases we may be unable to offer cover as the risk is too high.
When a client has been postponed or declined, we will always communicate our reasons for this decision.
Please view our extensive range of flyers aimed at explaining the ratings process to clients.