Insurance companies evaluate the health of their potential applicants before writing life insurance policies. In most cases, applicants answer many health questions, give permission for the insurer to retrieve their medical records from their doctor, and take a medical exam as part of the traditional underwriting process.
The Life Insurance Exam
In a typical medical exam for life insurance underwriting, the exam begins with taking the applicant's blood pressure and pulse. Then the examiner performs a thorough physical exam on the applicant to look for signs of poor health. After the physical exam is done, the examiner draws blood from the applicant for laboratory testing. If the applicant is applying for a high value life insurance policy or is over age 50, an EKG may be required by the insurer as well.
Simplified Underwriting
In the February 2007 LOMA Resource article entitled "Instant Underwriting," the advent of selling life insurance on the internet made it necessary to simplify and speed up underwriting for busy consumers who want to buy no exam life insurance within a few minutes. This also affords an opportunity for those who are nervous about having to go through an intensive medical exam to still get a life insurance policy.
With simplified underwriting, initial premiums for life insurance are higher in exchange for not having to undergo an insurance medical exam. Applicants generally have to answer a few health questions truthfully in order to get a policy. Then the insurer will perform a few additional database searches before approving the life insurance policy.
MIB- Fraud Detection in Insurance Applications
Even with simplified underwriting, insurers still ask for permission to pull the applicants' MIB (Medical Information Bureau) record. MIB acts like a credit information bureau for medical data gained from other insurance applications. Upon each insurance application, insurers send data to MIB regarding medical information found during the underwriting process. This helps lower the cost of insurance by reducing insurance fraud from omitted medical information.
Employer Group Life Insurance
Another method of getting no exam life insurance is through an employer's group life insurance plan. With an employer group plan, the only qualification needed is to apply for life insurance as an employee within the first month of hire to avoid underwriting. The main disadvantage of buying employer group life insurance is that the life insurance expires once employment has been terminated. Unlike health insurance, COBRA insurance continuation does not apply to life insurance.
Simplified underwriting allows consumers to buy life insurance without taking an intensive medical exam. Nevertheless, applicants still need to be in good health to get a no exam life insurance policy. This process is not intended to allow applicants in poor health to bypass underwriting.
Readers interested in this topic are often interested in learning about No Exam Health Insurance as well.
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