Learn how insurers evaluate medical risks for life insurance coverage
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Are you planning to buy a life insurance policy in India but feeling overwhelmed by the insurance jargon? One of the critical steps in obtaining life insurance coverage is medical underwriting. It is a process that evaluates your health status and determines the level of risk associated with providing coverage. Insurance companies use the medical underwriting process to determine the premium amount and decide whether to provide coverage. In this article, we will guide you through everything you need to know about life insurance medical underwriting in India, so you can make an informed decision.
In life insurance, underwriting is evaluating the risk you pose to the insurance company. If you are more likely to pass away during the policy term, the insurer may have to pay out a large sum to your family. To assess your risk, the insurer considers factors like your age, health, lifestyle, and medical history.
Medical underwriting in life insurance is a process of assessing the health status of an individual seeking coverage. It involves evaluating the medical history, current health condition, and lifestyle choices to determine the level of risk they pose to the insurance company. Based on this assessment, the insurer decides whether to offer coverage, the premium amount, and any exclusions or conditions that apply to the policy.
There are two types of medical underwriting in India: Full Medical Underwriting and Simplified Issue Underwriting. Here are more details.
In Full Medical Underwriting, the policyholder needs to undergo a thorough medical examination, including blood tests, urine tests, and other health-related tests. Insurance companies may also request the policyholder to provide additional medical records, such as X-rays, MRI scans, and other relevant medical reports.
In Simplified Issue Underwriting, the policyholder does not need to undergo a medical examination. However, the policyholder needs to answer a few questions related to their health condition, medical history, and lifestyle. Based on the answers provided, insurance companies determine the level of risk involved in providing coverage to the policyholder.
Underwriters are people appointed by an insurance company to assess the risk associated with issuing an insurance policy to the applicant. They act as the risk managers of the company. Underwriters analyse your details that include finances, medical conditions and lifestyle. Based on their evaluation, they submit recommendations about the risk you pose. Here are some observations they make.
Whether or not the company can issue an insurance policy to the applicant.
Whether the applicant’s medical conditions need to be taken into consideration while issuing the policy.
Whether the premium that the applicant will have to pay has to be increased. Higher the risk, higher the premium amount.
Here are the general steps involved in underwriting a Life Insurance Policy.
Step 1: Application review
The underwriter will go through your application form and check the details with you orally and cross verify them by going over relevant documents. If you’ve been accurate with your application form filling, this process doesn't take much time. In case any detail is amiss, it will be corrected after the underwriter fact-checks with you.
Step 2: Medical evaluation
You will be asked to undergo a series of medical exams. The suggested tests are based on the following factors.
Pre-existing medical conditions.
Details you’ve submitted in your application form.
The policy you plan on buying.
The coverage you aim to buy.
The rules of the insurance company.
Generally the following medical tests are suggested.
Blood examination: This is done in order to check for smoking habits, diabetes, heart diseases, bone diseases etc.
Urine test: Apart from basic details, urine test is also used to check for drug usage - alcohol, and other drugs.
Basic measurements: Height and weight checks are done to know your Body Mass Index (BMI) to determine your overall health.
Blood pressure: Your blood pressure is also checked during the process to understand the risks related to your heart.
Step 3: Document collection
Usually the following documents are requested in this stage.
Proof of age
Income proof and related documents
In some cases the underwriter can ask for a Motor Vehicle Report from the Department of Motor Vehicles to check your driving history. This is to check if you are a risky driver and pose a risk of an accident.
Step 4: Result
This is the final step where all the records and test results are considered to evaluate your application. You’ll be surprised to know that some basic parameters have a major role to play in deciding your premium cost. Parameters considered while rating your Life Insurance undertaking and the role they have to play.
BMI (Body Mass Index)
Lifestyle: Habits such as smoking, drug and alcohol consumption makes you susceptible to health concerns and risks including cancer.
Existing health conditions: Health conditions expose you to increased risk. It is a major deciding factor for whether your application gets rejected (in case of a major condition) or if you have to pay a higher premium.
Note: If you declare as a non-smoker but are found to be a smoker at the time of your death, your family might not receive the assured sum. It is best to furnish accurate details to your agent.
The medical underwriting process can take up to 1-8 weeks.
No, you just need to provide the requested information and undergo medical tests as soon as possible. This will help complete the process faster.
Yes, a policyholder can purchase life insurance without undergoing medical underwriting. However, such policies are usually more expensive than those requiring medical underwriting.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.