November 28, 2009

What happens during a paramedical exam for life insurance?

When you apply for life insurance, your health (both medical and financial) gets evaluated. This process starts with data gathering.

What's needed depends on your age and the amount of coverage. The requirements usually show on the life insurance projection you signed when you applied. Depending on your answers and test results, more investigations may be required.

The Nurse
A nurse came to my home at the appointed time to conduct the tests. She was pleasant, efficient and experienced. She also works at a hospital. She asked many questions throughout. The process took about 40 minutes.

Sometimes, the insurer requires that your examination be conducted by a doctor of their choosing. To prevent conflicts of interest, you can't use your own doctor.

The Requirements
As with a normal medical checkup, the nurse collected the basics
  • measures your height
  • checks your weight on her scale
  • checks your blood pressure
  • asks about your use of alcohol, tobacco and drugs
  • asks about you use of prescription medication
  • asks about changes in your health
In addition, I provided blood and urine samples which go all the way to Kansas City for analysis. Why there? Who knows. You'd think local testing would be faster and cheaper.

I also gave
  • proof of identity with my driver's license, which has a photo
  • the name/address of my doctor
Past health affects future health. So you're asked many questions about yourself and some about your family.
Tip: When answering questions, pretend you're on the witness stand or at border security. Be truthful. Be concise. Be quiet. You gain nothing by continuing to yak.
A final question asks if any relevant information was not provided. Clever.

An EKG was also required because of the amount of coverage I was requesting. This does not take a visit to a clinic for testing with a huge machine. Now a small device the size of a paperback novel suffices. Ten electrodes were connected over my chest. I sat comfortably with my feet resting on a chair. The results were converted to sound and communicated to the analysis centre by telephone. The squeals reminded me of dial-up modems connecting. Or R2D2 in a foul mood.

Had the EKG identified problems, the test would have been repeated.

Ouch! The EKG sensors attach to your body like bandages with metal probes on the back. The application is easy but removal stings if you have a hairy body like mine. The nurse asked me to remove the three most toughest probes.

Initial Results
The initial results look good and mirror my executive physical four months ago. If the insurance underwriters don't agree, you face
  • more tests, or
  • higher premiums (a poor health rating costs you just as a poor credit rating does), or
  • no offer of insurance (you're uninsurable)
There's no charge for the examinations to you or your advisor. The insurer covers the entire cost even if you are declined for coverage or you decline to purchase the coverage.

Each party loses if you don't get insured. You don't get the protection you wanted. Your advisor doesn't get paid. The insurer doesn't get revenue to cover the costs incurred. Even so, the insurer would rather lose a small amount now than to pay out a large death benefit for which you paid too little. (See why insurers won't insure you.)

If the underwriting process uncovers medical issues, your advisor never gets the details. To protect your privacy, the results go only to your doctor and you. You can then see if you can take steps to restore your health through treatment or changes in lifestyle.

Podcast Episode 45 (4:48)

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Group Insurance said...

My Life Insurance parameidcal only required a urinalysis and answer a bunch of medical questions. Depends on the amount of coverage. The article tends to lead everyone into believing that ALL coverage gets the same treatment.

Promod said...

Thanks for the comments.

Yes the amount of coverage does affect the underwriting requirements. I was describing what happened to me.

The second paragraph was meant to clarify: "What's needed depends on your age and the amount of coverage."

The requirements can also vary by company.