Last month, I wrote about the importance of reviewing your insurance coverage needs following a major life change, such as having children. Other such life changes include:
- a change in employer,
- starting a business,
- changes to mortgages or loans,
- marriage, separation or divorce, and
- receiving an inheritance.
Following a review of your coverage needs with your insurance specialist, the next step is to apply for and obtain the coverage required. It’s crucial to do this while you are insurable and can qualify to purchase any life, critical illness, disability or long-term care insurance coverage you may need. Any change in your health status, including medical concerns that require further investigation by a doctor, or pending medical tests, procedures or surgeries, will usually result in the insurance company postponing or declining an insurance application until all medical concerns are resolved with a positive outcome.
The first step in applying for insurance coverage is to complete an initial insurance application with the help of your insurance specialist. The application is then submitted to the insurance company’s underwriting team for a risk assessment. Beyond the details of your requested coverage, a number of other factors will be reviewed and additional medical information will be requested. All of the information provided to the insurance company is necessary to assess the insurance risk based on your individual lifestyle factors and medical history. For example, in addition to medical history, the underwriter will consider factors such as your:
- financial information,
- family medical history,
- tobacco and alcohol consumption,
- driving history,
- foreign travel plans,
- avocations (i.e., motor vehicle racing, hand gliding, mountaineering or heli-skiing),
- the reason the insurance product is requested, and
- the insurable interest of the beneficiary.
The second step typically requires the applicant to have various medical tests based on their age and the amount and type of coverage they have applied to purchase. Insurance companies contract medical professionals to perform the exams in your home or a professional clinic setting and cover the costs of the exams and tests they require.
Often required is a paramedical exam. This exam is performed by a nurse, usually at your home at a date and time that you choose. The process involves a series of health questions, which may be similar to the information already provided on the application, as well as blood pressure readings, height and weight measurements, and the procurement of samples for laboratory testing. The tests performed for an insurance application are slightly different than the standard tests done for a routine annual medical exam by a family doctor. In total there are approximately 16 different tests performed on the samples provided, and the results are sent directly to the insurance underwriter.
All of the information provided on the insurance application, along with the medical information and lab test results, will be reviewed by the insurance underwriter to assess the risk of issuing the policy. If you are a “good risk” based on your health status, finances and overall lifestyle factors, the insurer will offer to issue the policy at standard rates by way of an insurance contract.
Many companies also offer preferred rate programs, and in many cases will offer to issue the policy with lower than standard rates based on an individual’s current good health status and overall risk profile. This underwriting practice has been gaining in popularity and rewards those with better-than-average health.
On the other hand, coverage may be offered with higher rates based on an individual’s medical history or health conditions, and in some cases coverage might be declined, much to the disappointment of the person applying for coverage. Unfortunately, many people who have experienced a health issue really need and want insurance coverage but are no longer able to qualify.
My message is very simple: if you need insurance coverage to protect you or your loved ones, do not delay. It is important to take the next step to obtain the coverage you need while you qualify, and in many cases you will also be rewarded for your good health and lifestyle choices!
If you are not sure whether you have the right protection for your family, please feel free to contact me through your Odlum Brown Investment Advisor or Portfolio Manager.
Odlum Brown Financial Services Limited is a wholly-owned subsidiary of Odlum Brown Limited, offering life insurance products, retirement, estate and financial planning exclusively to Odlum Brown clients.