Medical Tests and Life Insurance

Recently, the need for requisite medical examinations prior to obtaining life insurance has come under some scrutiny. This sentiment has been perpetuated by the numerous companies providing insurance products without a medical as a clever attempt at attracting prospective customers.

The ever-increasing pace of today’s culture has demanded a streamlining of the dreaded ‘to-do list’. It’s no wonder the idea of obtaining insurance without the inconvenience of a visit to the doctor has become so appealing.

Typically, life insurance companies request medical tests if the client is applying for coverage of $250,000 and over or at lower face-amounts if the client is over the age of 50. Therefore, the higher the face amount and the older the client, the more medical tests required.

These tests are generally a function of the risk-level being absorbed by the insurance company. At smaller face-amounts the tests may only include a urine sample, for example. But as the risk to the client increases, tests may expand to include a medical exam, blood work and an ECG. When the face-amount exceeds $1,000,000 the insurance company may also initiate a request for an inspection report and/or a financial statement.

Insurance companies may also attempt to acertain a client’s risk by obtaining an Attending Physician Statement from the family doctor and/or a specialist. This does not require any work on the client’s part. The insurance company pays the doctor directly to complete the documentation. Once the insurance company collects this information they forward it to an underwriter to make the decision.

Despite the obvious convenience of avoiding this extra step, two important reasons remain for submitting to a medical test:

  1. Many insurance companies offer preferred rates to individuals whom are in good health and possess favorable family health histories. An insurance company can only make this assessment if they obtain the necessary medical information. The discounts can be substantial — as much as 30% in some instances, which can conversely, translate into savings of thousands of dollars.
  2. Providing insurance companies with all the necessary underwriting information up front shortens claim processing periods. Most creditor insurance applications for the likes of mortgages or lines of credit do not require medical tests. The fact that insurance companies have limited initial client information necessitates that they perform their underwriting at the time the claim is filed. Simply put, when your family needs the money most the insurance company is otherwise occupied finding out if you were as healthy as indicated on your initial application.

Taking a medical examination in concurrence with your life insurance application is an inconvenience worth enduring. It’s the difference between adequately protecting your family and thouroughly protecting them.

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