One of the most common questions I get when a client applies for new insurance is, “Do I have to take a physical?” The answer to that question is not as simple as “Yes” or “No.” When asked that question I have to answer, “It depends.”
It helps to remember that when it is all “said and done,” insurance is nothing more that a financial contract. If you suffer from the peril that is listed in the contract, the insurance company will pay money either to you or on your behalf to your creditors.
With the insurance company potentially being responsible to pay several thousands of dollars, they are going to make certain that you are not already suffering from the peril in question. Depending on what type of insurance you are getting, they will measure your morbidity or mortality risk.
Underwriters are measuring your Mortality Risk with your Life insurance application. They want to calculate your life expectancy. That way they can charge you a more appropriate premium for the risk they assume.
Physical exams are more commonly required for Life insurance than for Health insurance. I can pretty much guarantee that if you apply for more than $5,000,000 of Life insurance, the underwriter is going to require that you have a full medical exam from an independent physician to make certain that you are not going to drop dead tomorrow.
While an underwriter has the right to request a full physical exam, they are not that common for policies with less than $100,000 of death benefit. Typically, underwriters will assume that you are telling the truth about your current health and hobbies on the application.
When you apply for Life insurance with $100,000 – $5,000,000 of death benefit, things are a bit different. Most insurance companies will not request a full physical exam but they will require a para-medical exam.
That means that the insurance company will make arrangements for you to be seen by a nurse at your home or office, to verify your height, weight and medical history. They also are likely to require the nurse to take blood and urine samples for a basic lab work-up.
Depending on your insurance company’s underwriting policy, you may be required to submit to an EKG test so that the underwriter can be assured that your heart is functioning as it should.
After the underwriter reviews the lab reports, most insurance companies enclose a copy of the report along with your policy. If something is discovered that you are not aware of (think Magic Johnson. His AIDS status was discovered during a Life insurance exam.) your agent or insurance company will direct you to see your doctor ASAP. (Insurance agents are not qualified to make physical diagnosis but if an underwriter finds something that is not within normal parameters, she will direct you to your doctor so that he can start treatment if necessary.)
Health insurance underwriters are not as concerned with your life expectancy as they are with the odds of you needing expensive medical treatment during the year. That is referred to as “Morbidity Risk.”
Slightly over 2% of those who are insured cause over 90% of medical spending each year. The problem is that nobody can predict who will fall in that 2% of the insured population for certain.
The underwriter’s job is to try to charge the appropriate premium for those who are at a greater risk of needing more expensive medical treatment during the year.
Physical exams are not that common with Health insurance applications. In my 25 year career, I have only seen an underwriter request an applicant have a full physical exam twice.
For the most part, underwriters trust what you put on your application to be true. If you indicate that you have had recent medical treatment, they are more inclined to either make a telephone call to you or request records from your doctor.
In recent years, some insurance companies have tightened their medical underwriting requirements.
Earlier this week, a client trusted me enough to refer me to his son who needed some term Life insurance. Like many middle age males, his son bragged about not having gone to the doctor for years. His father has elevated blood pressure and a deformed heart valve. He is genetically predisposed to have circulatory problems.
I understand the “Macho” appeal of “I have never seen the doctor.” However, the facts are that there is a reason for an annual physical exam. What I hear when someone tells me that their health is so good that they do not see the need to see a doctor is their belief that, “There is no way that I will know until I start showing symptoms that there is even a problem.”
In recent years, many insurance companies have changed their underwriting requirements for people who avoid doctors. Many companies require an applicant to have seen a doctor in the last 2-5 years. If they have not, they require that the applicant have a full physical exam from their doctor, at their own expense, before they will approve insurance.
In 2014, health insurance will no longer be subject to medical underwriting. When that happens, there will be no reason for physical exams for health insurance at any time.
However, that is not the case for 2013. Health insurance for adults is still subject to medical underwriting. It is unlikely that you will be asked to get a physical exam. However, it is possible if you have not seen a doctor in the last few years.
My advice is to go ahead and get a physical exam from your doctor while you are thinking about it. Even if your plans do not include changing health insurance in 2013, it is good for you to find out if there is a problem going on before you start to show symptoms.
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