Medical Underwriting

Most life insurance policies have a medical underwriting process. With few exceptions, signing up isn’t the only thing you’ll do. The majority involve medical exams that will help the insurance company decide whether to insure you, and they will use this as one of the determining factors in how much your premiums will cost.

What Is Medical Underwriting?

Medical underwriting is one of the methods an insurance company uses to assess the risk of insuring an individual. It takes factors such as medical history, current health conditions, lifestyle, and hobbies into account.

This is accomplished through medical exams and having applicants answer questions.

Any aspect of this health risk assessment counts as medical underwriting – even a medical questionnaire without a physical exam constitutes medical underwriting, as is the case with policies such as simplified issue final expense insurance.

Why Do Companies Require It?

From the company’s perspective, a healthier person will be able to make more premium payments because of a longer life expectancy. Premium payments help pay for the insurance company to continue to operate. This allows the company to disburse large payouts while remaining profitable.

When Is Medical Underwriting Not Required?

Not all policies require medical underwriting, either due to the applicant’s unfavorable circumstances or because a medical underwriting process would be impractical.

Individual life insurance policies that don’t involve medical underwriting are called guaranteed issue policies. Individuals at risk for policy rejection because of age and/or poor health are more likely to seek guaranteed issue life insurance. This policy has higher premiums, and in most cases, waiting periods (the exception being guaranteed issue final expense).

With something like group health insurance, a medical underwriting process would require too much time and effort. If 100 people are paying premiums, it doesn’t make sense to stress over a minuscule percentage of the employees in poor health. The risk is lower when spread across a large group, which is why group insurance costs less per month.

What Can I Do?

While you cannot control your age or the health conditions you have, medical underwriting can still be an asset to you.

The best course of action is to adopt a healthy lifestyle. For instance, using tobacco will cause your premiums to be higher by default, even if you do not have any significant health problems at the time you enroll. Other lifestyle changes such as losing weight can help as well. By making these changes, you can potentially save hundreds (if not thousands) of dollars per year on your life insurance costs.

Want to Learn More?

Are you interested in learning more about the medical underwriting process and what it means for you? Give Alite Financial Professionals a call today.

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