Why You Should Choose Medical Underwriting for Your Nomad Health Insurance
Quite some digital nomads are making a mistake by trying to avoid medical underwriting in their long-term international health insurance. There is only a small number of cases where this can actually make sense. You are most likely none of them.
When selecting health insurance as a digital nomad, opting for medical underwriting can often provide better coverage and cost-effectiveness. Here’s why:
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What is Medical Underwriting?
Medical underwriting is the process where an insurance company evaluates your current health status and your medical history to assess the risk and determine your policy terms and premiums. This involves filling out a health questionnaire and sometimes undergoing a medical exam. From the findings the medical underwriters assess if and how much your individual risk package varies from the calculated statistical average of a healthy person.
In contrast, moratorium underwriting does not require an initial health declaration but excludes coverage for (temporary) pre-existing conditions for a set period (usually two years). Long-term conditions like chronic diseases will due to their nature always remain excluded in moratorium contracts.
Community-rated policies are a third alternative: These are group contracts that pool an number of individuals big enough to carry the medical cost of its members. This is the underlying idea of state organized public health insurance funds or large organizations insurance contracts (e.g. for the employees or big companies).
Sometimes clients ask for a discount on the premium due to their healthy behaviour. But actually the standard rates of insurance premiums are calculated for healthy people – the base risk pool. From there the conditions are adjusted for people with pre-existing conditions or ongoing treatments by adding exclusions or risk loadings.
Christoph Huebner, Chief Nomad at NOMADS.insure
Why is Medical Underwriting Beneficial?
Only a contract that results from assessing your medical history gives you certainty about what is covered and what isn’t.
- Clear Understanding of Coverage:
It provides transparency on what is covered and what is excluded, reducing surprises during claims. - Potential for Lower Premiums:
If you are healthy, you can often secure lower premiums compared to a community-rated policy that doesn’t differentiate based on health status. - Tailored Insurance Plans:
Insurers can offer plans that specifically match your health needs, avoiding unnecessary costs.
How to Navigate Medical Underwriting
Actually the process is very straightforward for the applicant: It starts with a medical questionnaire which usually consist of 10 to 40 questions, categorized in past, present and future. An example question could be:
“In the past 3 years, have you had any outpatient examinations, consultations, or treatment by physicians, non-medical practitioners, or other therapists, or have you had any illnesses, disabilities, or medical conditions that have not been treated?”
If all those questions can be answered with “no”, then that’s already it. Only if an answer is “yes”, then details need to be provided, sometimes including past doctor’s notes or hospital letters. Only in rather rare cases a new examination by a doctor must be performed.
- Prepare Your Medical History:
Gather records and be thorough with your disclosures. - Be Honest and Precise:
Accurately describe your conditions to avoid future disputes. - Consult a Broker:
An experienced broker can help navigate the process smoothly.
Advantages of Using an Independent Broker
A broker is – opposed to the insurance agent – not representing any insurance company. The independent broker by law represents you as a client towards the insurance providers. Just like an attorney this industry expert can make sure that the insurance company – like the judge in court – only hears the truth and facts worded in a way that it won’t unnecessarily backfire to you.
An insurance broker with experience in medical underwriting can be beneficial in various ways:
- Anonymous Pre-Approvals: Brokers can perform anonymous but binding pre-approvals with underwriters from different insurance providers, giving you a clearer picture without committing. This provides you with the grounds for an educated decision.
- Expertise in Medical Descriptions: Skilled brokers understand the nuances of medical conditions and can help present them accurately yet optimally, allowing underwriters to make informed decisions.
Understanding How Insurers View Pre-Existing Conditions
Insurance companies categorize pre-existing conditions by their risk levels and potential for future claims. Chronic conditions like asthma might lead to higher premiums or exclusions, whereas completely treatable conditions might not impact the policy terms significantly.
Examples of Insurance Providers and Their Underwriting Approaches
- Foyer Global Health: Offers both full medical underwriting and a moratorium clause, allowing flexibility based on the applicant’s situation.
- PassportCard: Requires full medical underwriting for individual contracts and aims to cover as many people as possible. They often operate with exclusions for pre-existing conditions instead of denying coverage or adding risk-loadings.
- COVRD.EE: Known for the strictest underwriting in the market, they often deny coverage rather than offer policies with exclusions or risk loadings.
- BDAE: Offers competitive prices for healthy individuals but applies risk loadings for even minor conditions after thorough underwriting assessments.
- Regency for Expats: Does not offer medical underwriting and excludes all pre-existing conditions by default. Also they consider a pre-existing condition not only what you have been aware of during the application but anything that had been already in your body (e.g. a growing cyst or even a tumor you haven’t known of).
Why not moratorium underwriting?
Yes, the application process is faster and easier if you do not need to answer any questions for your medical history and current condition. But those 10 minutes saved in time today will come at a price in future.
As an example this is the policy wording of Foyer Global Health for their moratorium offered to individuals 55 years old or younger:
“In this case, insurance cover will be granted for any condition suffered by the person to be insured in the five years prior to inception of the insurance cover after a continuous waiting period of two years without medical treatment, symptoms, advice or medication for that pre-existing condition. If the insured person during the first two years of insurance cover receives medical treatment, advice or medication for that pre-existing condition then a waiting period of two years (without medical treatment, advice or medication) for that condition begins again. Services for new illnesses not linked to that condition will be immediately reimbursed.”
In practice this means: Everything that happens after inception of the contract is generally covered. But the insurance company will in every claims process have an extra thorough look into potential pre-existing conditions.
I had a client who joined our services through a brokers mandate with his existing contract that he had concluded using the moratorium clause – as he thought would be more convenient without knowing the consequences.
When it came to the reimbursement of a treatment due to a Gastritis diagnosis the insurer asked for medical records from the past. And as in this situation you as the client are the one who wants money you will need to deliver material until the claims department of the insurer is happy to proceed.
As there were notes of a tentative diagnosis for “gastroesophageal reflux disease (GERD) with esophagitis” to be found in an old doctor’s note the insurer (rightfully) denied the reimbursement.The entire process cost a lot of time and energy. Had the matter been subject to a medical underwriting it might have caused a risk loading of probably around 10 percent. An acceptable amount for the peace of mind that the condition is insured.
Christoph Huebner, health insurance broker for digital nomads
When does moratorium underwriting actually make sense?
Long-term conditions that require lifelong treatments and come with a bunch of follow-up risks often permanently close the door to private health insurance with medical underwriting. The application would be rejected and no insurance coverage offered.
If you suffer from such a condition and perceive it as a calculable risk in terms of the cost of medication and the severity of a potential flare-up then moratorium can be an option for you.
In the past years I had two different clients suffering from bipolar personality disorder. For them the moratorium clause was the only way into an international health insurance. Each of them assessed the risk of having health insurance for everything else except their psychological condition (and its consequences) as an acceptable compromise.
Christoph Huebner, expert in medical underwriting
They were both able and willing to pay for their medication out of their own pocket and bought health insurance for all unrelated medical risks.
Conclusion: Full medical underwriting is always better
As a location independent remote worker you want to know what is actually covered by your health insurance. You need to be able to rely on your coverage as you have it to save your most important asset: Your body’s health!
Only with full medical underwriting that considers your medical history and your current health status you can be certain about the extent of your insurance benefits.
For digital nomads, understanding the intricacies of health insurance can be challenging. We offer a free guide that provides checklists, a decision tree, and detailed explanations to help you navigate the complexities of nomad health insurance. Download it now to make the best-informed decision for your health coverage while traveling the world.
And after you read it: Book a free consultation and let us together get you the best possible deal for your nomad health insurance.
F.A.Q.: Medical Underwriting for Digital Nomads
Who should opt for medical underwriting?
Everybody who has a medical condition close to the average of healthy people. Any ongoing treatments with perspective of timely healing are not a deal-breaker. Only certain permanent or chronic conditions can make it impossible to get coverage through medical underwriting and can make it necessary to opt for a moratorium underwriting (e.g. a bipolar personality disorder).
What is moratorium underwriting?
For a very small group of people moratorium underwriting in health insurance can make sense: It does not consider medical history and excludes all pre-existing conditions, often over a rolling period of two years. This comes with the convenience of a quick signup process but strong uncertainty about what is actually covered as often existing medical conditions can lead to a variety of consequences.
What happens if I don’t disclose a condition?
If you forget to mention (or intentionally don’t mention) a relevant fact about your medical history then the insurance contract is concluded based on incomplete information – and thus suspended ineffective. This means if the insurance provider becomes aware of the fact later on (e.g. due to an invoice for a treatment which this filed for reimbursement) then the insurer has several options:
1. In a minor case it will offer to continue the coverage with a risk loading, usually payable backwards since the beginning of the contract
2. In major cases the provider will revoke the contract as it was concluded based on fraudulent behavior.
Thus it is never a good idea to give imprecise answers in a medical questionnaire. If you are in doubt about certain conditions and their consequences: Talk to us!
