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Are you insurable?

This is a very important question for anybody wanting to purchase an insurance policy. Being insurable is an indication of how fit one is in getting coverage. Sometimes, getting insured can be fairly easy. For some people though, times getting covered may not be a walk in the park.

This article explores why it can be a bit tough to get insured.

What is insurability?

Insurance companies are not like any other business. They don’t just sell their products to anyone interested to buy them. Each application they receive go through review, even those applications are made when buying life insurance online. At times, they may deny applications for insurance for various reasons.

One of the things that insurers will check is insurability.

Insurability is all about whether one can get coverage for an insurance or not. It is a check that determines whether someone is a fit to purchase a particular policy.

They look at a number of things such as health condition, age, occupation, and other factors, and they evaluate how likely it is that an insurance claim is made. Then they will decide the extent of coverage they can provide, how much it will cost (called a premium), or in some occasions they may deny an application.

What insurability means is that the insurance being purchased is not too much of a risk for the insurer. This also ensures that the policyholder is treated fairly, as the cost and type of the coverage are aligned with any risk involved.

Moreover, it also allows the insurer to maintain financial stability by balancing the goal of providing coverage and the financial impact from claims.

Below are some of the common factors for insurability.

• Age
• Health Status
• Medical history
• Family history
• Personal history
• Gender
• Lifestyle choices
• Occupation
• Hobbies and activities
• Location

Age

Insurers will check how old the insured person is, as age is a factor in determining the risks of providing coverage.

In any given population, people belonging to certain age groups show different risks with respect to various types of insurance products.

Very young individuals, such as infants for example, are yet to form immunity to diseases. At a very tender age, their body is developing and they can be prone to getting sick. Their health outcome is also dependent on environment, care provider (such as guardian or parents), nutrition, etc.

Additionally, very old people can also be sickly. They have a higher chance of developing health issues and of facing mortality-related events. They can be very ill if they are struck with a disease. Also, they may take longer time and need more medical care for recovery. They may be less fit as they are not at the peak of their health. They may likewise be less active because of being bedridden or sedentary due to injury, serious ailment, or mobility issue.

Other risks are also present associated with young and elderly adults with respect to behavior and probability to get involved in accident. For example, young adults are more likely to engage in unhealthy habits and risky behaviors, while older individuals have higher health risks and slower response times.

In the Philippines, insurance policies are available for kids and the elderly/senior citizens. Moreover, some health insurance products allow adding them as dependents.

Health status

The status of one’s health is also an indicator whether a coverage is going to be approved. Insurers need to know how likely a person is going to be sick or mortality risk, which is linked with the potential result to a claim being made.

Some of the factors can include any pre-existing conditions, chronic illness, or any ailment that require medical care.

One’s health status is also a factor that can be linked to the lifespan of the person being insured, which in turn will impact coverage particularly with long-term policies.

Medical history

Insurers are also going to look into medical history.

That is why, those who are buying an insurance are asked to provide experiences of pre-existing condition, a history of serious illnesses, diagnosis, consultations, hospital admission, prescription, medical care received, surgeries, therapies, etc.

Such information give valuable insights into past health experiences and potential future health risks. It also gives a clue whether past ailment is impacting present health conditions, going to recur in the future, or results to increased chances of mortality.

Family history

Family history is also another factor that plays into the insurability of the person. A typical question asked about family history are the chronic illnesses and causes of death for close family members such as grandparents, parents, and siblings.

By knowing such healthcare-related detail about one’s family, the insurer can check any predisposition to certain illnesses. They can have more and better insight into an individual’s health risks in the future and life expectancy. Together with medical history, it also creates a better understanding of the overall health risks of a person.

In some instances, the person applying for insurance may be asked to undergo medical screening for certain diseases for preventive measure.

Personal history

Another less well-known factor is personal history, which includes moral standing or legal history.

There are certain acts, experiences, or behaviors that may impact the approval for an insurance coverage. This can include addiction, involvement in gambling or criminal acts or group, or records of being involved in a lawsuit.

Gender

An ongoing debate exists whether gender should still be part in determining the fitness of a person when applying for coverage. There is a movement towards gender-neutral coverage.

Insurers in the past rely on statistical data on general population. With regards to life expectancy in the Philippines, Filipino women on average live to 72.06 years, which is 6.75 years longer than Filipino men.

Women tend to suffer certain conditions such as cancer, reproductive health issues, and pregnancy-related complications, while men may be associated with other serious ailments or higher risks of accidents.

Lifestyle choices

Another consideration is lifestyle choice of an individual. For example, one’s health outcome and longevity may be linked with diet, exercise, and habit. An addiction to smoking and alcoholism, as well as a sedentary lifestyle may lead to heart diseases, respiratory illnesses, and poor medical condition.

Some insurers have a health and wellness program. Participation to the program may result to a number of benefits such as reduced premium or higher coverage.

Occupation

The type of employment may also play a role in getting insured.

Certain occupations have a higher risk profile compared to others. For instance, people in politics, military, and law enforcement have a higher chances of getting involved in conflict and violence.

Sometimes, a number of occupation can lead to lack of physical exercise such as office-based jobs and clerical positions. In the other side of the spectrum, those who are employed in physically demanding jobs are at a risk of injuries.

Some forms of employment are also prone to accidents and work-related diseases. People in construction have higher probability of falling from a height or being injured from an object falling on them. Individuals in manufacturing, research, and healthcare industry may be exposed to certain hazardous chemicals, pathogens, and dreaded illnesses.

Hobbies and activities

Risky recreation and other pursuits may lead to lower insurability. For example, a person engaged in extreme sports are more likely to meet an accident and sustain injuries. These activities may include rock climbing, sky diving, motorports, racing, etc.

At times, hobbies may expose people to certain substances and environments that may lead to complications an life-long health conditions.

Location

People in some areas may be charged with higher premium or their insurance application denied based on where they live, attend school, or work.

A good example are individuals living in areas caught in the crossfire of an armed conflict or an ongoing war.

At times, insurers also assess how exposed an area is to not only man-made disaster but also natural calamities. These can include those places where typhoons hit frequently, along fault lines (and thus are exposed to tremors and earthquakes), close proximity to an active volcano, climate change, wildfires, etc.

What are the impacts of insurability?

The process of reviewing and the outcome of insurability vary with insurers and insurance products. Sometimes, it can be minimal or extensive depending on what policy one is purchasing and the extent of the coverage.

Insurers have different ways to get an overall picture of the insurance risks involved in an application. They may get information from the insurance agent selling the policy, the application form itself (where you have to fill out the details in good faith), third parties, etc.

The best outcome is that the person applying for coverage is cleared to purchase an insurance.

But what happens in other cases?

What are the consequences when insurers have some issues with one’s insurability?

• Medical exam. The person seeking to purchase insurance may be asked to undergo medical exams, be seen by a physician, or required to submit a certificate of good health before the policy is approved.
• Increase in premium rate. The premium, that is the amount being paid to the insurer, may be increased to account for the risks associated with the coverage.
• Limited insurance option. Sometimes, the insurer may offer fewer insurance products that one can avail. For example, one cannot apply for critical illness cover or may be only allowed to take a term insurance.
• Exclusions. Coverage may be reduced. This can either be the amount of benefits or payout that one can claim, or the type or extent of insurance being covered.
• Terms and conditions may be modified. The insurance contract can be changed as a result of the review of one’s insurability.
• Waiting time. There are also instances where an application may be put on hold pending for further review. An example would be when the insured person is told to re-apply after pregnancy.
• Application is denied. The worst-case scenario is when an application for insurance is denied.

Take-away

An insurance is a financial decision that impacts both the person applying for it and the insurer giving the coverage.

Insurability is a way to make sure that risks linked with the application are not beyond that the insurer can take. It helps insurers to decide if they can allow a policy to be issued and how much it will cost, making way for a fair deal and the right coverage.