What Is Insurance Loading?

When you apply for health insurance or life insurance, you need to fill out a medical questionnaire to declare your medical history. Underwriters use this information to determine whether the insurance company needs to impose any loadings or exclusions or decline your application based on the declaration.

If you are relatively healthy and have no pre-existing conditions that need to be covered by insurance, you will be charged standard premiums, which vary based on age and gender, whether you’re a smoker or non-smoker, and from product to product and company to company.

But what if you have a pre-existing condition that your insurer agrees to cover? In that case, you will have to pay an extra fee. This extra charge is called premium loading or insurance loading. A loading is added to your premium because your insurer has assessed that, given your pre-existing conditions, you are more likely to file a claim than others and therefore pose a greater risk to their company.

Common pre-existing conditions include asthma, chronic back pain, type 2 diabetes, endometriosis, high BMI, hyperlipidemia (high cholesterol) and hypertension (high blood pressure).

Loadings and exclusions: What’s the difference?

When it comes to pre-existing conditions, most insurance companies address them through premium loadings or exclusions.

Let’s say your insurer agrees to provide you with insurance protection for health issues other than your pre-existing condition. Here, your pre-existing condition is an exclusion, meaning you pay the standard premiums (based on your age, gender, and whether or not you smoke), but you can’t make any insurance claims related to that excluded condition.

In summary:

Insurance plan with premium loading added to cover pre-existing conditions:

• Covers pre-existing conditions? Yes (per the terms of your policy)
• Premium paid: Higher

Insurance plan whose exclusions include pre-existing conditions:

• Covers pre-existing conditions? No
• Premium paid: Standard

Premium loadings: A great reason to buy insurance when you’re young and healthy

The best time to buy insurance is when you’re young and healthy – before you discover any medical conditions. That way, you can secure long-term insurance coverage with the assurance that your policy will cover any health conditions you might acquire in the future.