Hi everyone, this is the third episode of our Mental Health in Life Insurance week. We have quite an unusual episode today, in that we have an adviser, actuary and underwriter all sat together to talk about insurance. It’s not often that you get such a broad insight of the industry all in one place.

We are talking about how insurers decide who can have what insurance and what price it will be. Actuaries take a look at huge amounts of general population data and analyse this to help them determine what might happen to these people in the future. They use data to produce statistics about how likely it is that person A that is X years old, will become seriously ill or die. 

It is then the role of the underwriting developers to look at this data and decide what risks an insurer can and cannot take. For mental health this could be looking at the data on mild anxiety and deciding that the insurer can accept someone that lives with this at ‘normal’ terms (the basic premium). Or it might be that they look at data that shows that some conditions are linked to a statistically higher risk of ill health or death, with the decision to then charge a higher premium to.

The key takeaways:

• Insurers take broad population studies to understand how certain circumstances influence a person’s chance of being seriously ill or dying. This is then used to form many of their decisions, but they will also do what they can to listen to individual circumstances.
• An explanation as to why bipolar disorder is a condition that usually results in an increased premium for life insurance, and leads to some difficulty in getting income protection cover.
• A clear example of how a premium might be increased for life insurance, due to a mental health condition. 

Without going into a deep data chat this episode helps us to see how insurers come to their decisions, based upon the way that the industry works at the moment, and upon the data that is available now. It’s always important to remember that underwriters are regularly reviewing what an insurer offers, and what is or is not available today, could change tomorrow. 

We have Vanessa Sallows (Legal & General) and Monica Garcia (Monica Garcia Consulting) with us in our podcast tomorrow to discuss what mental health support there is for insurance policyholders before, during and after a claim.

Remember, if you are listening to this as part of your work, you can claim a CPD certificate on our website, thanks to our sponsors Octo Members.

If you want to know more about how to arrange protection insurance, take a look at my Protection Insurance in Practice course here.