How life insurance applications are assessed
A life insurance application is perhaps the most important step when planning your financial security. It is unlikely that you will insure anything else in your life for such a substantial amount of cover and it is equally true that the security and stability your life insurance offers to your dependants is immeasurable.
It is not surprising then, that the assessment of your life insurance application involves a high degree of careful and skillful consideration.
Why is the application form so comprehensive?
When assessing your application for life insurance, companies take into consideration your:
- medical history,
- financial history,
- occupation,
- sports, and
- pastimes.
This information enables insurers to assess your application according to the risks you may or may not be exposed to and ensures that you are charged a premium appropriate to your individual circumstances.
Do I have to answer all of the questions in the application form?
As part of your application you are asked to sign a declaration stating that the information you provide is complete and correct.
Life insurance companies make their assessments based on the answers you provide. It follows then, that all questions must be answered completely and correctly. If for some reason an insurer has cause to query the accuracy of information provided at a future date, (such as in the case of a claim) and non-disclosure is revealed, it could result in your cover being invalid.
It is therefore extremely important that you ensure the accuracy of the information provided at the time of application.
Once your policy is issued, any change that occurs will not affect your cover, and as long as you continue to pay your premiums you will continue to be insured until the policy expires.
What happens if I can’t remember everything about my medical history?
If you cannot recall particular details about your history, inform your financial adviser and supply the names and contact details of any medical practitioners who you may have consulted in the past. Your insurer will then try to obtain relevant medical history details on your behalf and as authorized by you within the application form.
What happens to the information I supply?
Your application is sent to an insurance company’s underwriting team for assessment and to ensure that the level of premium you are required to pay is appropriate to your overall risk profile.
All health and financial information provided by you is strictly confidential and is only used by an insurer for the purpose of assessing your life insurance application. The information is only viewed by the person or persons who have a direct role in that assessment.
Once the assessment process has been finalised and the insurer has issued your policy, your information is kept securely on file should you make a claim.
What other information may be requested to assess my application?
Insurers try to keep their assessment limited to the information provided in the application form, but in some cases additional medical or financial information may be requested.
This could be as a result of information disclosed on the application that requires further investigation, or the amount of life insurance you are applying for.
Typically, the need for additional medical information will involve an insurance company:
- writing to one of your doctors for further information (as authorised by you on the application form)
- asking you to undergo a medical examination or blood test
- asking you to complete some additional questions in relation to a specific medical condition.
Generally speaking, the insurer will cover the cost of any such testing.
What can I expect once my application has been assessed?
Once an insurer has all the information required to make an assessment, they will advise you in writing of the outcome.
In the vast majority of cases an insurer will accept your application as proposed and send you a Policy Schedule outlining the details of your cover.
If they do not accept your application due to concerns over an increased risk, they will generally offer you alternative terms of insurance so that you can still obtain some cover.
The alternative terms offered may take the form of:
- a loading which is an increased premium to cover the risk
- an exclusion of risks relating to specific medical conditions or activities
- a reduction in the level of cover
In cases where the insurer has serious concerns they may decline cover at this point in time, however they may offer a reassessment at a specific future date. There may also be some cases where they cannot offer any cover at all.
What happens if my test results uncover an unknown problem with my health?
Results of medical examinations and other tests are disclosed to life insurance companies directly in accordance with the authority provided by you. If a previously unknown medical situation presents itself, they are only authorized to inform you of how it affects your insurance application.
In such circumstances they would send a copy of the medical evidence to your family doctor upon your request. They may then recommend that you consult your doctor to discuss the findings of your tests in more detail.
If you have more questions about life insurance assessment...
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October 2009
