The underwriting gap

Life insurance exists to help protect against serious, sometimes life-changing events. However, many Australians are drawn to the lowest premium without fully considering how an insurer evaluates risk.

“Underwriting is a process by which a life insurer assesses and documents risk at the time a policy is issued,” says Miguel Cortes, senior manager of direct product and proposition at NobleOak. 

“It typically considers five key areas: an individual’s health, medical history, occupation, lifestyle and financial exposure, which help the insurer determine whether cover can be offered, on what terms, and the price on which they can be offered.”

Fully underwritten or partial underwritten policies

Life insurance policies differ in how much information insurers collect before issuing cover.

“A fully underwritten policy assesses risk before it is issued. Medical and lifestyle information is reviewed and any exclusions or loadings are clearly defined,” Cortes says. 

This helps to provide clarity from the outset.

By contrast, partially underwritten life policies rely on limited information at the start. “With limited underwriting, exclusions are often broad, standardised or assessed retrospectively, which can lead to disputes or delays at claim time,” he explains.

The convenience trade-off

Simple, faster insurance applications may feel appealing but often bring less clarity and peace of mind. 

“Faster application processes generally come with less precision and more assumptions built into the pricing and policy terms,” explains Cortes. 

If underwriting is deferred, investigations often happen at claim time when clients or their families are already under stress. “The insurer will sooner or later ask for health and lifestyle information,” he adds. “If they do it at the beginning, you have clarity on what is covered. If they do it at the end, that is when uncertainty may come in.” 

Underwriting and claims

Underwriting and claim acceptance go hand in hand. “Claim acceptance is strongly influenced by alignment between what was said, what was promised and what is claimed,” says Cortes.

From a customer perspective, it may be more beneficial to consider a fully underwritten policy. “This helps to ensure that when you have to claim, the insurer does not need to ask all those questions and that gives you certainty that the claim will be processed smoothly.”

This alignment shows up in claim outcomes. NobleOak accepted 98.2 per cent of life cover claims in the last financial year, compared with an industry average of 92.9 per cent.*

“It is worth looking at a provider’s claims acceptance rate, as this can influence your experience at claim time,” says Cortes. “APRA, through MoneySmart, makes this information public and you can see the number of claims accepted, disputes received to help consumers to make an informed decision.”

Insurance can be a key part of long-term financial planning, Cortes notes. “In the end, it is about having confidence in your cover, knowing that if the unexpected happens, you will have more peace of mind that those who depend on you will be looked after.”

CPA members are entitled to lifetime discounts on Life and Income Protection Insurance from NobleOak. Get a quote here.

 

_{Important information: Please note, cover is available to Australian residents only. NobleOak Life Limited ABN 85 087 648 708 AFSL No. 247302 (NobleOak) issues the products. T&Cs apply. CPA Australia discounts information on site.}

_{*As reported by MoneySmart.gov.au sourced from ASIC from 1 July 2024 to 30 June 2025. Full table can be accessed at Life insurance claims comparison tool – Moneysmart.gov.au. The payout of claims may be impacted by factors such as the cause of death. Past performance is not necessarily indicative of future results and actual events or performance may differ materially. It is not guaranteed that NobleOak will accept all Life cover claims.}

_{The information contained in this document is of a general nature only and does not take into consideration your objectives, financial situation or needs. Before making a decision to purchase or continue with a product you should read the relevant Product Disclosure Statement (PDS), Target Market Determination (TMD) and Financial Services Guide (FSG). If you are considering replacing an existing life insurance policy, you should consider your circumstances, including continuing the existing cover until the replacement policy is issued and cover confirmed.}

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