Worked Examples and Checklists
Applying for life insurance: underwriting checklist and what to expect
How life and income protection underwriting works in Australia, what insurers ask, loadings and exclusions, genetic tests, cooling-off, and a checklist before you apply.
When you apply for retail cover, or for extra cover through super, the insurer underwrites the application: it asks about your health, family history, occupation, income, pastimes and smoking, and may ask for medical reports or tests. It then accepts you at standard rates, accepts you with a premium loading or an exclusion, postpones the decision, or declines. The best protection against a declined claim later is answering every question accurately and completely now, and reading the acceptance terms before the cooling-off period ends.
This guide is part of the worked examples section.
What insurers ask
| Area | Typical questions | Why it matters |
|---|---|---|
| Personal | Age, sex, residency status, smoking and vaping in the last 12 months | Base premium rates |
| Occupation | Job title, duties, hours, percentage of manual work, qualifications | Occupation class for TPD and income protection |
| Income | Salary, business income, recent tax returns for the self-employed | Maximum income protection benefit |
| Health | Current and past conditions, medications, tests, specialist visits, mental health | Loadings, exclusions, decline |
| Family history | Conditions in parents and siblings, usually before age 60 | Trauma and life loadings |
| Lifestyle | Alcohol, drug use, dangerous pastimes, travel | Exclusions or loadings |
| Existing cover | Other policies, cover being replaced | Total cover limits; offsets |
Many insurers use tele-interviews, where an interviewer asks the questions by phone and records the answers. Ask for a copy of the recorded answers and check them.
Possible outcomes
| Outcome | What it means | What to do |
|---|---|---|
| Standard acceptance | Normal premium rates | Read the policy schedule |
| Premium loading | You pay extra, often a percentage such as +50% on one cover type | Ask whether it can be reviewed later |
| Exclusion | A condition or activity is not covered, such as back problems for income protection | Check how broadly it is worded |
| Postponement | The insurer waits, for example until test results or recovery | Reapply when advised |
| Decline | No cover offered | Ask for reasons; try another insurer or super cover |
Worked example: comparing two offers with different terms
Illustrative: Rachel, 39, has had two episodes of lower back pain treated with physiotherapy.
- Insurer A offers income protection at $2,100 a year with an exclusion for "any condition of the spine, back or neck".
- Insurer B offers $2,520 a year (a 20% loading) with no exclusion.
The extra cost of Insurer B is $420 a year, or about $286 after tax at a 32% rate ($420 × 0.68). Back conditions are a common cause of income protection claims for many occupations. Rachel decides the $286 a year to keep cover for her back is worth it. A broader exclusion would have left her uncovered for one of her most likely claim causes.
Genetic tests
Under the Financial Services Council's industry moratorium in place since 2019, life insurers generally do not use adverse genetic test results for cover up to set limits, without the applicant's consent. In 2024 the Australian Government announced it would legislate a ban on life insurers using adverse genetic test results. Whether and from when that ban applies to your application should be checked on the Treasury website, or ask the insurer directly. Family history questions remain part of applications.
Your duty when applying
For consumer insurance contracts, the duty since 5 October 2021 is to take reasonable care not to make a misrepresentation. Answer the questions asked, honestly and completely, as a reasonable person in your circumstances would. If you are unsure whether something counts, include it. An insurer can reduce or refuse a claim, or avoid the policy, if it would not have issued the cover on the same terms and you breached the duty. See the duty to take reasonable care.
Cooling-off
Retail life policies have a cooling-off period, generally at least 14 days from receiving the policy, during which you can cancel for a refund of premiums. Use it to read the policy schedule and acceptance letter.
The checklist
- Gather records first: medications, GP and specialist visits, test results for the past five years or more, and recent tax returns if self-employed.
- Describe your occupation precisely, including manual duties and hours.
- Answer every question accurately; do not let an adviser or interviewer summarise in a way that leaves things out.
- Ask for a copy of the application and any tele-interview record.
- Read the acceptance letter: loadings, exclusions, sums insured, waiting periods, benefit periods.
- Check the start date and that the first premium has been paid.
- Keep old cover until the new cover is accepted in writing.
- Name beneficiaries on retail life policies, and check super nominations separately.
- Ask for a review of loadings or exclusions after a period of good health, if the insurer offers this.
- Tell the insurer about changes before the policy starts, if your health changes between application and acceptance.
The cover review checklist covers the wider review.
Underwriting in super
Default cover in super is often granted without health questions, subject to being at work or meeting other conditions when cover starts. Extra cover, reinstating lapsed cover, or transferring cover from another fund usually needs an application. Some funds offer limited automatic increases at life events, such as marriage or a new child, without health questions. See cover inside super versus retail.
Frequently asked questions
Will a mental health history stop me getting cover?
Not necessarily. Insurers assess severity, treatment and time since the last episode. Outcomes range from standard acceptance to exclusions on income protection. Some insurers are more flexible than others.
Can an insurer check my medical records?
With your authority, yes. Applications usually include an authority to obtain medical information.
What happens if I forgot something after the policy started?
Tell the insurer in writing as soon as possible. Correcting it early is far better than having it found at claim time.
Sources
- Moneysmart — applying for life insurance
- Treasury — genetic testing and life insurance policy
- Financial Services Council — Life Insurance Code of Practice and genetic testing standard
- Federal Register of Legislation — Insurance Contracts Act 1984
