How Medical Underwriting Affect Life Expectancy

The most obvious factor that affects a person’s life expectancy is the chronological age of a person but there are more factors that should be considered. The most important of which are habits that affect the final computation of life expectancy. This includes certain events (car accidents), activities (smoking or drinking), and health conditions (high blood pressure or diabetes) can shorten a person’s life expectancy.
Medical underwriting (MU) is simply the process of determining whether a plaintiff’s life expectancy is shorter than average. As you may know by now, this information can be used to determine a settlement amount and, in some instances, how the settlement will be structured.
SPI Structures explained that the medical underwriting process begins with the submission of the plaintiff’s medical records for review by each life insurance company involved with the settlement. Each annuity company will use the information in these records to assign to the plaintiff what is called an “age up-rate” or “rated age,” which is used instead of his or her chronological age for pricing a lifetime structured settlement annuity. The use of a rated age may increase the size of the settlement a plaintiff may receive since, the shorter the life expectancy, the less money the annuity company anticipates paying out over a plaintiff’s lifetime.
This process gives the plaintiff an opportunity to determine whether or not an applicant should be granted medical coverage based on the patient’s current or pre-existing medical conditions. Once the final assessment is in, a medical underwriter may then either accept or deny insurance coverage for the individual. If the applicant is then determined to be qualified, the premium rate to set for that particular client is the next to be decided on. This will also be based on the financial risk that entails accepting the applicant. Although it was created for the purpose of lowering insurance premiums for individuals, the practice of medical underwriting may be considered a harsh practice by some who are denied coverage based on a minor condition. Insurers, however, may argue that the practice prohibits individuals from seeking coverage strictly when surgery or other expensive medical procedures are needed.
source: SPI Structures