What Actually Is Underwriting? And Do You Need to Care?

I've been deep diving into insurance recently - partly for a client, partly because it's a pretty integral part of financial planning that gets talked about far too little, it’s a bit ‘boring’ and it’s pretty jargony. So let's try and fix that.

Underwriting is the word that comes up whenever you apply for insurance of any kind - life insurance, critical illness cover, income protection, even some mortgages. It can sound technical and slightly intimidating but it isn't, really. Once you understand what's happening and why, you're in a much better position to navigate it and to advocate for yourself if things don't go smoothly.

So What Actually Is Underwriting?

At its simplest, underwriting is the process by which an insurer decides whether to cover you, and if so, how much to charge you for that cover.

The word comes from the early days of insurance at Lloyd's of London, where merchants would literally write their name under a description of the risk they were willing to take on. The principle hasn't really changed that much, someone (or some algorithm) is assessing how likely you are to make a claim, and pricing accordingly.

When you apply for life insurance, for example, the insurer wants to understand the probability that they will need to pay out, or in other words, the likelihood that you will die during the term of your policy. They're not being morbid, it’s just the business. The more risk they take on, the more they charge. The less risk, the less you pay.

This assessment uses information about you: your age, your health, your lifestyle, your occupation, your family history. Some of this is collected via a questionnaire, some might be gathered by contacting your GP or having you undergo medical examinations. Some, increasingly, is done algorithmically based on data points you may not even realise you've provided.

The Types of Underwriting Decision

When you apply for insurance, one of a few things can happen:

Standard terms - you're offered cover at the standard rate. No loading or exclusions. This is what most people without significant health history or risk factors will receive.

Rated or loaded terms - you're offered cover, but at a higher premium than standard because the insurer has assessed you as a higher risk. This is common with pre-existing health conditions, certain occupations or lifestyle factors like smoking.

Exclusions - you're offered cover, but specific conditions or causes of death are excluded from the policy. For example, someone with a history of heart problems might be offered life insurance that excludes claims related to cardiovascular events.

Postponement - the insurer wants to wait. This might happen if you've recently been diagnosed with something and your condition is still being assessed, if you’re pregnant or if you're in the middle of treatment for something. They'll often say come back in 12 or 24 months.

Decline - the insurer won't offer you cover at all but this is less common than people fear, although it does happen. Importantly, a decline from one insurer does not mean you cannot get cover - different insurers underwrite differently, and a specialist broker can often find options that a standard application process wouldn't reach.

What Insurers Can and Cannot Take Into Account

This is where it gets interesting I think, and where it matters most for people who sit outside the assumed norm of insurance applicants.

The Equality Act 2010 generally prohibits discrimination on the basis of protected characteristics. However, there are specific exceptions carved out for insurance. Insurers are legally permitted to charge more or refuse cover based on age and disability (including health conditions), provided the decision is based on relevant and reasonable evidence - like actuarial data, medical research or claims history. In practice, this means that having a disability or a health condition can legitimately affect your premium or your ability to get cover.

What they cannot do is discriminate based on race, sex, sexual orientation, religion, or pregnancy in a way that isn't justified by actual risk data. Gender, for example, was used to price insurance differently until 2012, when an EU ruling ended the practice. Male and female applicants are now assessed on the same basis. 

Mental health history is one of the most commonly asked-about areas and one of the most anxiety-inducing for applicants. Insurers will ask about diagnoses, treatment, medication, hospital admissions and time off work. One in four people in the UK experience a mental health problem each year, and insurers are experienced at assessing these applications. A history of mild to moderate depression or anxiety that is well managed is unlikely to result in a decline, though it may result in a loading or questions for your GP. More serious or recent episodes, particularly those involving hospitalisation or crises, may result in postponement or a higher premium.

If you're worried about this, it's worth knowing that you have to answer honestly, but you don't have to answer more than you're asked. Stick to the facts. And consider using a broker who specialises in non-standard applications rather than going directly to an insurer.

HIV status and life insurance have a painful history. For many years, a HIV positive diagnosis meant automatic decline, full stop. This has changed in recent years, largely because medical advances mean that people living with HIV who are on effective treatment have near-normal life expectancy. HIV is now treated as a pre-existing condition rather than an automatic bar to cover, and some insurers can offer standard rates to people with undetectable viral loads and good CD4 counts. If you've been turned down in the past, it is absolutely worth trying again, ideally through a specialist broker.

The Trans Experience of Underwriting

It would be remiss to talk about underwriting without addressing the particular experience of trans people, because this has been a site of real difficulty.

For transgender applicants, the picture is complicated, particularly in light of recent legal changes in the UK. The 2025 Supreme Court ruling in For Women Scotland v The Scottish Ministers determined that a Gender Recognition Certificate does not change a person's sex for the purposes of the Equality Act 2010. This has created genuine uncertainty about how trans people will be treated in insurance underwriting going forward. I don’t have the answers and things are moving quickly (legally speaking…). Currently, the Equality Act still provides protection against discrimination on the grounds of gender reassignment. Full disclosure remains essential - withholding information about medical history, including hormone therapy or surgery, can invalidate a policy. If you're trans and navigating insurance, a specialist LGBTQ+ financial adviser or broker is likely your best starting point.

The Class and Race Dimensions

Here is something that deserves to be said clearly: insurance is not equally accessible to everyone, and the people who most need protection are often those who find it hardest to get, creating a clear disparity in coverage.

Research has found that people from Black, Asian and other ethnic minority households, lone parents, and disabled people are significantly less likely to hold any insurance. This is partly about cost - the ‘poverty premium’ means lower-income households can end up paying more for financial products or going without entirely. It's also about how underwriting algorithms work: even when protected characteristics are not explicitly used in pricing, algorithmic proxies can effectively replicate discrimination. Someone's postcode, occupation or credit history can correlate closely with race or class, and insurers may not even be aware of the bias their models are embedding.

The FCA has been paying increasing attention to this, and the insurance industry is under pressure to address it. But for now, the practical reality is that if you're already financially marginalised, the system is more likely to work against you.

If affordability is the issue, it is worth knowing that some employer benefit packages include life insurance (death in service) regardless of underwriting - these group schemes often don't require individual medical assessment. Checking what your employer offers is a great first step.

What This Means For Real People

1. Start by finding out what you already have. Many people have death in service benefits through their employer - typically two to four times your salary - and have no idea. Check your employment contract or ask HR. This is cover you already have, at no extra cost to you, and it requires no underwriting.

2. Be honest in applications. This is non-negotiable. If you withhold information and your insurer discovers it - which they will when a claim is made and they go through medical records - they can refuse to pay out. The entire point of the policy disappears so honesty protects you and the people you're insuring for.

3. Don't assume a decline is the end. Different insurers have different underwriting approaches. A decline from one is not a universal verdict. A specialist broker who works with non-standard applications can often find routes that a standard application wouldn't.

4. If mental health history is a concern, prepare. Know your dates, diagnoses and treatments before you apply. If you're asked whether you've had time off work for mental health reasons, have the numbers ready. Vague answers prompt more questions and clear, calm, factual answers are easier to process.

5. Consider a broker rather than going direct. For anyone with a pre-existing condition, a non-standard occupation, a complicated health history or anything that might trigger manual underwriting, a broker - particularly a specialist one - can save a lot of time and distress. They know which insurers are likely to be more sympathetic to particular circumstances, and can present your application in the best possible light.

(A little personal note here, I always thought brokers were for ‘proper adults’ and ‘people who knew what they were doing’ but I’ve used a few in my time in business and they’ve all been great. It’s something about the name that makes them seem Victorian or something, to me anyway, but they’re not!)

6. If the premium feels too high, challenge it. Rated premiums can sometimes be reduced over time if your circumstances change - if you stop smoking, if a mental health condition has been stable for several years, if a medical situation has resolved. It's worth going back.

A Final Thought

Underwriting can feel like being judged. Someone is going through your medical history, your lifestyle choices, your family's health and then arriving at a number that represents how risky you are. That can feel uncomfortable, particularly for people who already carry shame or stigma around aspects of their health or identity.

But the point of all of it,  this whole complicated, intrusive, sometimes infuriating process, is to end up with a piece of paper that says that if something happens to you, the people you love will be okay. Or if something happens and you can't work, you will be okay.

That really matters so you are worth the trouble of navigating it.

If you'd like to talk through what insurance might look like for your specific situation - including if you've had a difficult experience in the past that’s making this harder, I'd love to help talk you through that. 

Book a free call here.

Love Eleanor. xxx