In the life insurance industry, the process of evaluating how much a given policy will cost is frequently referred to as underwriting. Generally speaking, the underwriting process is designed to balance the financial viability of the plan for the life insurance company while also offering consumers a satisfactory amount of coverage.
One of the reasons that determine the cost of a life insurance policy—particularly, a whole life insurance policy—can be more complex than other financial assets is that the payout date (usually the death of the policyholder) is not known at the time of purchasing. Because an individual life insurance policy may be paid out one week from now or 60 years down the road, there will obviously be many variables that your life insurance policy may want to consider.
Though some life insurance policies offer guaranteed and immediate coverage, the majority of policies will include a medical examination and a corresponding questionnaire. In the eyes of the life insurance company, anything that statistically increases the amount of time you are expected to live will decrease your monthly rates. Anything that decreases the amount of time you are expected to live will increase your monthly premiums.
There are many different things that are considered during the underwriting process and the relevance of these things can vary tremendously between any two life insurance providers (or even any two policies from the same provider). Fortunately, many life insurance providers disclose their underwriting policies on their website or other readily available resources. We take a quick look at some of the most common questions people have about the underwriting process and how you can prepare yourself to qualify for the best life insurance premiums.
Are Medical Exams Required For Life Insurance?
As stated, medical exams are required for some life insurance policies, but they are not required for all life insurance policies. The policies that do not require an exam are often advertised offering “guaranteed” or “immediate” life insurance coverage. This type of coverage will usually be relatively limited and may have certain costs built-in to every policy. Usually, larger or more complicated policies will require a medical exam.
What Does The Exam Test For?
Generally speaking, most life insurance health examinations are looking for common diseases (or other conditions) that will decrease your average life expectancy.
A life insurance medical exam may include multiple different components such as:
On the medical exam, they will also consider other physical variables such as:
During a medical exam, life insurance companies are also looking for:
These various health conditions can all result in increased premiums or having your life insurance application denied. Evidence of non-prescription opiate or amphetamine use will almost always result in the denial of life insurance coverage. Policies relating to marijuana and nicotine use will vary significantly by company, but generally, regularly using either of these substances will increase premiums.
Where Do I Go To Take A Life Insurance Medical Exam?
The location where you will take your life insurance health exam will depend on the specific company you are using. Typically, larger companies with more connections and access to a wider range of resources will give you a wider range of options to choose from.
A life insurance medical exam will generally take place at a local medical clinic. The insurance provider will likely give you a list of different clinics you can choose from. Some larger companies will allow you to take the medical exam at one of their offices, though this is not always the case. Other companies will send a nurse right to your home for your life insurance medical examination. You also may have the option to do the verbal portion of the exam over the phone. In order to know which options are currently available for you, it is very important to speak with your life insurance provider.
Can I Retake the Exam?
To answer this question simply, yes, you will usually have the option to retake a life insurance medical exam if you choose to do so. However, there are typically a few important details regarding a medical exam retake that should probably be considered.
While most life insurance companies do offer the option for you to retake your medical exam, they will typically require you to wait at least six months since your previous examination. Even once you have taken this exam, experiencing a decrease in your rates is still something that is far from guaranteed.
The decision to change your monthly premiums will be entirely up to the underwriters. If you are able to turn your health around or if you are able to successfully quit smoking (usually, for at least a few years), then your life insurance rates may be adjusted downward. However, if you are only marginally “healthier” without experiencing any other major changes, then your rates will likely remain the same.
If you believe you will be able to qualify as “healthier” but your current life insurance provider is unwilling to adjust your rates, then it may be in your best interest to consider transferring your policy to another insurance provider. The transfer process can sometimes be rather complicated but is still an option worth considering. The specific details regarding this process will depend on the company you are leaving and the company you are transferring your policy to.
What Common Questions Will Appear On A Life Insurance Questionnaire?
As stated, in addition to the physical component of the medical examination, there will also usually be a rather extensive personal questionnaire during the underwriting process. Though it may be possible for you to lie about your physical health during this component of the process, it is probably a very bad idea for you to actually do so. If your death is connected to something you were dishonest about during the questionnaire, your loved ones may be denied a significant portion of your life insurance policy.
The length of the health questionnaire during the underwriting process can vary from dozens to even hundreds of questions.
Some of the most common questions you might be asked on a life insurance medical exam:
Though the question portion of the medical exam can be quite extensive, you should not assume that one “bad” answer will automatically disqualify you from the type of policy you are hoping to receive. There are many different variables that underwriters will consider and they generally prefer to view them comprehensively.
What Impact Does Smoking Have On The Cost Of A Life Insurance Policy?
Because smoking—or any sort of tobacco or nicotine consumption—is an activity that is proven to decrease your life expectancy, almost all life insurance providers will increase monthly premiums for active users. However, if you are able to eventually overcome your habit, many life insurance providers will be willing to adjust your rates in the future.
The specific impact that smoking will have on a given life insurance policy will vary tremendously throughout the industry. For example, if you are an occasional user (often defined as one tobacco product per month or less), then insurance providers might not increase your rates or only increase them by a limited amount. The impact of other variables such as the consumption of chewing tobacco, electronic cigarettes, marijuana (even for medical usage), and other products will also vary by life insurance provider.
Should I Apply For A No Exam Life Insurance Policy?
Chances are unless you are terminally ill, the short answer is no. While term life insurance coverage can be issued very quickly for people who skip the medical exam, the life insurance premiums you pay will reflect the overall risk you pose to the insurer.
Because you have not been medically tested in a no-medical life insurance policy, the insurer automatically assigns you a higher risk, which means higher coverage. Unless you need immediate coverage, or have a health condition that would otherwise make you a very high risk anyways, it is best to take the medical exam when applying for life insurance.
How Can I Prepare For A Life Insurance Medical Exam?
In general, there are a few things you can do to prepare for the medical component of a life insurance exam. If you are not planning on getting life insurance for the next few years, you may want to make an effort to exercise, quit smoking, and otherwise focus on your personal health.
If you are planning on taking the exam in the next few weeks, the primary thing you should do is make an effort to get organized. Gathering your medical records, information regarding your primary care physician, and other relevant details can help make the underwriting process go by significantly more quickly. Most life insurance providers want to help and want you to be covered by them as soon as possible. Though the underwriting process can sometimes be frustratingly slow, it does mean that you are one step closer to accessing the financial security you and your loved ones require.