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What Can Life Insurance Companies Ask You When You Apply?


Life insurance companies are in business to make money – not lose money. They charge premiums to their customers to cover all their operating costs and benefit payouts. Their key determinant of how much to charge is based on mortality tables. These tables statistically predict how long a person will live.

Mortality tables are based on all sorts of factors that influence a person’s life expectancy. Companies must determine how much to charge each person they insure based on these factors. So they can ask you about anything they feel is relevant to assigning an appropriate mortality risk to you. Their risk is assigning you a statistical life expectancy that’s too long for your actual circumstances. In that case they would not collect sufficient premiums from you to pay your death benefit since you would ‘statistically’ die earlier than they had planned.

Underwriting factors are aspects about you that the company must find out to assure you’re assigned to a life expectancy appropriate to your true health status. These factors include age, health, family health history, health-related habits, occupation, and more. Let’s consider some…

They may have you take a physical exam – but not necessarily. But even if they don’t, they’ll require you to answer some broad health questions in your application. Higher insurance payouts usually require a physical exam. Here are some questions you may be asked, and why.

*Do you have heart disease, cancer, diabetes, AIDS, etc.?

Such diseases clearly shorten life expectancy. Having some relatively recent medical history – i.e. doctor examinations – showing any diagnoses and/or treatment of such diseases is important in appraising your health status. If your condition can’t be risk-compensated by an appropriate rate adjustment, a company may simply turn you down.

*Is there a family history of fatal disease?

Family-related diseases have statistical relevance to your mortality statistics. It’s a genetic connection. So the company is not limited to knowing about just your own health record. Examples of relevant family diseases are: Huntington’s Disease, heart disease, stroke, Sickle Cell Anemia.

*Can Insurance Companies Use Genetic Testing For Life Insurance Applications?

Yes. Current technology has extended the ‘family history’ issue to checking your genetic proclivities by genetic testing of your blood. So some companies have begun looking at your chromosomes for evidence that you have inherited genes that have been linked to various diseases.

The above questions relate to aspect about your genetic make up that you can do little about. But there are other questions they’ll ask about behavior that can shorten your life. Here are some.

*Do you use tobacco products?

Statistics show that smoking shortens life expectancy. So they’ll charge higher rates for smokers – to offset shorter premium paying years.

*Do you have a dangerous job?

Dangerous implies such jobs statistically increase your risk of dying. Dangerous job examples are: test pilot, race car driver, coal miner, sky diver.

*Have you been cited for drunk driving?

Driving drunk is dangerous behavior. But beyond this, it may trigger questions about alcohol abuse and disease too.

Yes, insurance companies do ask you questions about everything that can affect your health status. They need to get the correct answers so they can stay in business.

Shane Flait helps you with your financial legal, tax, and retirement goals.
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