Why is Medical History Relevant for Life Insurance?

iQuanti: When it comes time to apply for life insurance, something that you'll see time and time again are questions regarding your medical history. Though it can be off-putting, especially for those without the most stellar health, there is a reason for this. Here's what you need to know about how that information is used to determine your life insurance quotes. 

What Is Life Insurance? 

Just like any other insurance type, life insurance requires you, the policyholder, to pay a monthly premium for a lump sum benefit to be paid out in the event of your death. The funds are released to the beneficiaries you name on the policy and are a tax-free way for surviving loved ones to pay off debts, maintain a quality of life, and afford living expenses. 

Life insurance comes in different forms, such as a term policy good for a set amount of time or a whole policy good for a person's entire life. 

While all life insurance policies seek to provide the same good, they can range in cost drastically. There are a few factors that go into this. Some examples of these include: 

• Benefit amount
• Term or whole policy
• Medical history 

How Medical History Affects a Policy 

Life insurance is a matter of risk for the life insurance company. When they take on a new client, they're assuming the risk that you will die before you've made more than a handful of payments, which means a financial loss for the insurance company. 

To help offset some of this risk, a life insurer will look at things like your medical history to adjust the amount you pay to match your risk. For example, if you're a 20-year-old with no significant health problems, you present less of a risk and can get away with paying a smaller premium. On the other hand, if you're 65 years old and have both a history of diabetes and high cholesterol, that means you have a higher chance of premature death, both due to age and health complications. 

Some things that the life insurance company may be looking for include: 

• Mental health disorders
• High cholesterol
• High blood sugar
• HIV or AIDS

Can You Hide Your Medical History? 

Checking your medical history is a way for the life insurance company to verify that you're being honest on your application and not hiding any potential health complications in search of a better rate. By looking through your records and sometimes having you visit an in-network provider for an examination before granting you a life insurance policy, they help to mitigate their risk of losing money. 

If, for some reason, you slip through the cracks during your application and manage to be approved by lying on your application, don't think you're in the clear. Upon your death, the life insurance company will investigate the cause and compare it with information from your application. If you answered no to a family history of high blood pressure, but they later found that it did run in your family, and you've died of the same thing, it may render your policy useless, which means that your loved ones will not receive any benefit because your life insurance policy was never valid, to begin with. 

The Bottom Line

Your medical history determines the type of life insurance policy you're eligible for and the price you pay. Life insurance companies will often accept you as a customer despite health ailments, but you'll usually be required to pay a higher premium to offset the risk. Though it may be tempting to omit information to secure better rates, that can spell out major trouble for your loved ones when the time comes. 

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