About Life Insurance Medical Exams
By Victoria Trix
When shopping for a life insurance policy, applicants can expect to be asked to take a medical exam administered by an independent agent hired by the insurance company. This exam should verify initial questions about your health discussed in your application for life insurance, but could also expose any additional risk factors to your health.
While most of us have seen television commercials promising life insurance policies to senior citizens with “no medical examination,” it is important to remember this scenario is the exception rather than the rule. While the companies offering no-exam policies make honest claims, many of these life insurance policies only cover the costs of funeral expenses and are often capped at a $50,000 payout. Any policy of higher liability to the insurance company typically requires a medical examination.
Benefits of an Exam for the Insured
Individuals between the ages of 50 and 85 can experience more difficulty obtaining life insurance due to the increased chance of terminal medical conditions associated with their age. Policies not requiring a medical exam are often targeted to seniors in this age group, offering the limited payout mentioned above. But for those who fall in the over-50 age bracket and consider themselves healthy, seeking a life insurance policy that requires an exam could be a good way to obtain a better policy. Regardless of age and whether the policy being sought is term life or whole life, successfully submitting to a medical exam can either secure a better policy or lower the premiums of the policy being sought.
Most life insurance carriers and policies are designed for families with monthly bills to pay and children to care for after a head of the family has died. Insurance agents will often recommend insuring both spouses, even if only one is employed. Obviously, if the breadwinner of the family dies, the surviving spouse will need financial means to continue in the lifestyle that he or she is accustomed to. If there are minor children involved, the surviving spouse will assume the time-restricting responsibility of caring for the children, which usually requires hiring of domestic help or some form of daycare.
Policy payouts for young families are typically in the hundreds of thousands of dollars in consideration of lost wages, remaining home and auto payments, and future expenses for dependent children, such as college education. Because the liability to life insurance companies is substantial, they need to know if there are medical conditions involved that increase the likelihood of a premature death of the insured.
How Life Insurance Companies Profit
Most individuals reduce the amount of life insurance they need as they get older, since fixed expenses are reduced and children grow up and move out of the home. The likelihood of the life insurance company having to issue a large disbursement is reduced as the policyholder gets older and the needs of the policy change. It is, therefore, to the advantage of the life insurance company for their policyholders to live as long as possible, enabling the company to continue collecting monthly premiums.
For this reason, a comprehensive list of medical tests are required by the insurance company prior to accepting an application for insurance. It is possible to be denied life insurance based on medical history or exam results. But in most cases, negative results from a medical exam will only result in higher monthly premiums for life insurance.