Why Do Life Insurers Require a Medical Exam?

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Don't be surprised when a life insurance company wants a doctor's visit.

Key points

  • When buying life insurance, consumers are often required to undergo a medical exam.
  • Medical exams are designed to help uncover the would-be policyholder's health status.
  • This is important for insurers to decide whether to offer coverage and to set premiums.

In most cases, consumers who apply for life insurance will be required to undergo a medical exam. While this may seem burdensome and annoying, there's actually a really important reason why insurers require this in the majority of situations.

Here's why insurers want would-be policyholders to get checked out by a doctor who will evaluate the details of their health status.

Life insurance medical exams are an important factor insurers consider in extending coverage

Life insurers often insist upon a medical exam because they need to find out sufficient information about a policyholder's health status before they are willing to offer coverage.

Life insurers put applicants through an underwriting process in which they evaluate the likelihood the policyholder will pass away during the coverage term. Insurers do this because they want to minimize the chances of insuring someone who will end up dying during the coverage period.

If a potential policyholder has a high chance of passing away -- which would result in beneficiaries collecting the death benefit -- then the insurer would either deny coverage or would charge much higher premiums in order to get protection.

The key to the underwriting process is assessing the health status of the policyholder to see if they have any serious medical conditions that make the chances of passing away higher. For example, insurers would want to know if a potential policyholder has high cholesterol, has diabetes, is a smoker, or has heart disease or other serious medical issues.

A medical exam can uncover undiagnosed health issues

Insurance companies ask policyholders questions about their health status, but people don't always provide comprehensive and accurate information. And sometimes people have a health problem, such as high blood pressure, they aren't aware of because it hasn't been diagnosed before applying for life insurance.

A life insurance medical exam allows the insurer to have a medical professional evaluate an applicant's health status so they can get in-depth information about any medical issues that could result in a problem that leads to death. The health insurance exam consists of tests such as a blood pressure reading, blood test, and urine test. The doctor who works for the life insurer can make an independent -- and hopefully accurate -- assessment of just how healthy the potential applicant is so the insurer can consider this information during the underwriting process.

Not every insurer requires a medical exam

Now, a small number of insurers have done away with this exam and will provide coverage for those who are reasonably young and healthy without requiring they undergo a physical first. However, there are typically coverage limits on no-exam policies even by insurers that offer a reasonable amount of protection after using algorithms to make a health assessment.

There are also alternatives such as guaranteed issue policies that exist and provide coverage to anyone who applies without an exam and regardless of health status. But the coverage these provide is generally far less comprehensive than the protections that come with a standard term or whole life policy that requires a medical exam.

Those who are applying for coverage should anticipate undergoing a life insurance physical so they can get the right insurance coverage for their needs at the best price an insurer will offer someone with their health status.

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