How Life Insurance Is Assessed?

Life insurance works by determining the health, lifestyle and the risk of the insured in order to determine the premium to pay for the insurance policy. Life insurance premiums usually can be paid monthly or annually.

By having a life insurance policy it offers your dependants security and stability in the event of accidental death.

Completing life insurance application form

Part of the application process is to complete life insurance application form which needs to be answered truthfully and correctly and to the best of your ability.

Once you have completed the application form you are required to sign a declaration which basically states that the information that you provided was correct and true.

If at any stage an insurance company should have cause to query the information that you provided in the event of a claim and nondisclosure is revealed, then it could result in your cover being invalid. It is therefore essential that you ensure the accuracy of the information provided at the time of the application.

What will happen if I cannot remember everything about my medical History?

If for some reason you are unable to answer some questions regarding your medical history just inform your adviser, and supply the name and address of the doctor whom you consulted in the past, that could have these medical records.

What happens to the information I supply?

Your application is then sent to the insurance company's underwriting team for further assessment, where they make the decision as to whether the premium you are going to pay is suitable to your overall risk profile.

All the information that you provide is strictly confidential and is only used by the insurance company for the purpose of assessing your application for life insurance. This information is only viewed by the people who have a direct role in that assessment. This may include third parties such as reinsurers, medical experts and claims assessors.

What else may be requested to assess my life insurance application?

As a result of the information provided on the application form people are sometimes requested to:

  • Undergo a medical examination or blood test.
  • You may be required to complete a questionnaire in relation to a specific medical condition.

What other information may be required to assess my application?

In most cases what is on the application form will suffice, but in some cases additional medical or financial information may be requested.

The reason for this could be as a result of the amount of life insurance that you are applying for, or due to information disclosed on the application which might require further investigation.

If a medical examination is required, then in most cases the insurance company will cover the cost.

What happens after my life insurance application has been assessed?

Once an application has been assessed the insurance company will advise you in writing as to the outcome.

The insurance company may accept your life insurance application as proposed and will send you a Policy Schedule outlining the details of your cover.

If for some reason they do not accept your application they will generally offer you amended terms of insurance so that you can still obtain cover.

The alternate terms could be offered in the form of:

  • An increased premium to cover the risk.
  • An exclusion relating to a specific medical condition or activity.
  • A reduced level of cover.

Once life insurance assessment has been finalised

Once life insurance assessment has been finalised, and your policy has been issued, then your information is securely stored away until a claim is lodged.

What happens if my results uncover a problem with my health?

Once medical examinations and other results are completed they are sent to the insurance company.

In the event of these examinations revealing something previously unknown, then insurance companies are only authorised 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, and then suggest that you consult your doctor to discuss the findings of your tests in more detail.

More questions?

If you have more questions on how life insurance is assessed which have not been answered here please call us on 1300 793 143 or fill out the form on this page and our experienced advisers will help you.

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Published on March 3-th, 2010 in Life Insurance
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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