Medical exams are an important part of the life insurance purchase process. Life insurance is based on the concept of ‘utmost good faith’, meaning both customers and the insurers are transparent about their conditions.
Yes, there can be instances where you don’t require undergoing a medical examination for policy issuance. However, there are some conditions and considerations to this.
The life insurance policy covers your family financially from the threat of losing your life. A threat to your life, however, can come from external forces like accidents and disasters or internal forces like health.
Usually, when you go to buy a product from the market, the rule which applies is ‘buyer beware’. This rule means the buyer is responsible for the research and collecting all the information he/she needs about the product and service before purchase.
However, in the case of life insurance, an insurance company is not in a position to investigate the buyer’s life, especially health issues. In fact, chances are if you are not going for regular health check-up, even you may be unaware of your health conditions.
A life insurer, who will protect your family from the financial burden caused by your untimely death, has the right to know all the risks to your life internal and external. Thus, medical exam forms an inseparable part of the purchase process.
Life insurance, or any other insurance, is based on the law of probabilities. For example, there are only specific types of risks which an insurance plan will cover - Low probability of the incident and Low probability of high damage cost.
An example of such events can be road accidents. Probability of accidents happening is low if we look at per 100,000 vehicles on the road. Out of the accidents that do happen, chances that the loss will be significant are even lower. That is why insurance for an accident is possible.
If the probability of an event happening is high, it defeats the unpredictability of insurable incidents. And you can plan to mitigate your losses from a predictable incident. Similarly, if there are high chances of loss being significantly high, you should probably avoid such an incident.
So, the insurable cases must fall within the range of acceptable risk for the insurer. Even within the range, all individual policies will carry a different risk probability. The higher up the risk or magnitude of loss the higher the premium cost for the cover.
While insurers have already estimated the external risks to your life and accounted for in the premium cost, your health is the only variable. So, what if you have a health condition?
In case you have an existing health condition, it only means your life carries more risk and the insurer may:
In the case of life insurance, proposal rejections are rare. However, cover and premium modifications are common for people buying in later ages.
When you apply a new term insurance policy, the premium cost is the average premium cost for a normal healthy life. If the medical exam uncovers an illness or you have a medical condition which increases your risk of death, the insurer will propose a new higher-premium.
In the case of pre-existing diseases, the policy will not cover death due to the disease but for all other reasons, except the normally excluded ones. This also means that even people undergoing treatment for a specific disease can buy a life insurance policy. Just that, their policy will not work if the death happens due to the disease.
If you avoid the medical exam and secure a life cover, chances of claim rejection will increase. As the insurer’s promise is only based on the relevant facts you declare in the application form.
So, when you bought a policy without the medical exam from an insurer, either you have declared any pre-existing medical condition or that you are perfectly healthy. In case you have declared healthy, and the death occurs due to an illness, the insurer may reject the claim.
If you have already bought the policy without a medical exam, you should consider going through a regular check-up. Apprise your life insurer of any permanent change in your health condition at the earliest.
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