Insurance Licensing Exam Vs Insurance Medical Exam

There is a very big difference between the life insurance licensing exam and the life insurance medical exam, though many can get confused by the two, given the similarity in phrasing.

While the former is the insurance exam students take following an insurance license class, the latter involves the actual physical testing done as part of the life insurance application process and deserves some further explanation.

A life insurance medical exam is the physical testing a life insurance carrier performs to thoroughly review an individual’s medical history—including reviewing the information provided on the initial application. The exam is generally performed by a nurse or nurse practitioner, qualified to do such testing.

The information provided in the exam, combined with statistical longevity and other actuarial data, will be used to determine if an individual qualifies for a life insurance policy or not, and how the premium is calculated.​

The Life Insurance Medical Exam: Two Parts

The first part of the medical exam is a question and answer period where the nurse or other medical professional will ask a series of questions. This usually lasts about 20 to 30 minutes.

Then the applicant will usually be required to give blood and urine samples. These tests are simple enough and the samples are often collected in an individual’s home, rather than in a doctor’s office or hospital setting.  The applicant can expect to be notified in advance which tests will be performed.

Why Life Insurance Companies Require a Medical Exam

The life insurance company requires these exams for several reasons.

First, the insurance carrier will want to confirm the information provided in the original life insurance application. The questions during the verbal questionnaire take a deeper view into an individual’s medical history, including that of family members.

Then the insurance company will seek to detect possible underlying medical problems. Conditions like HIV or diabetes can be detected—even if the applicant isn’t aware of the condition. The insurance carrier will also look to verify nicotine or other drug use.

A Word on Longevity Charts

Longevity charts provide the insurance carrier statistics on the morbidity of individuals at various ages. This information is then used by the insurance carrier to determine the potential risk they’re facing in offering coverage. As an example, a longevity table may show that men at age 27 die with greater frequency than women of the same age. Using this piece of data, the carrier knows it might be taking a greater risk by insuring the man rather than a woman, and the premium would reflect that.

When Does Coverage Begin?

The time coverage actually begins may vary, depending on the insurance company. Every carrier uses different rules and there is no real standard. However, many carriers initiate coverage from the time the original application is signed. In this scenario, if the applicant subsequently passes the medical exam then they’d be insured while the results of the exam are processed.

If the policy premium was paid when the application was submitted then it’s possible coverage may begin on that date assuming the company approves the medical exam and application, as noted above. If the premium wasn’t paid upon application submission, then coverage may not begin until acceptance by the insurance carrier—depending on the terms and conditions of the policy.

The agent or life insurance company should be able to provide details on how the policy works in this regard, and explain at what point coverage begins. It’s important to note that life policies also contain contestability clauses that allow the company to deny benefits for a multitude of reasons in the first two years of a life insurance policy. Make it a point to understand terms and conditions of coverage before a policy is issued.

Life Insurance Medical Exam: What Happens if an Applicant Fails?

Obviously, if the information provided on the initial application doesn’t match with the results of the medical exam, then it’s likely that coverage will be denied—or additional testing may be required, depending on the circumstances. Again, be sure to understand the terms and conditions of coverage as a change of circumstances can result in no coverage.

An applicant can request a copy of the failed medical exam results if they feel that a result was inaccurate, or if they want to consult with their doctor. Serious health issues should be discussed with a doctor, of course. However, if the insurance company made a mistake during the review process, then a consultation with a doctor may help to remedy the situation, and possibly have a decision to not provide insurance by the carrier reversed.

If the Applicant Dies Before the Medical Results are Available

As a rule of thumb, if coverage begins when the application is submitted, and the applicant would have ultimately been accepted then it’s likely that a beneficiary will receive the insurance benefit in a scenario where the applicant dies prior to policy issuance. But, if the applicant would have been denied coverage for any underwriting reason subsequent to initial application submission, then coverage would not apply.

Many life insurance policies also include suicide provisions that will deny a benefit in the case of a suicide. Similarly, dangerous or illegal activities, fraud, or “acts of war” as a cause of death may be excluded. Each life insurance policy has its own terms and conditions. Again, the applicant should understand the terms and conditions of coverage.

Other Options After a Medical Exam Failure

If an applicant has been denied coverage after failing a medical exam, they would be well-advised to contact a specialist broker who likely has access to many life insurance companies and policy types. A good agent should understand where to find the right policy. As a capable, soon-to-be life agent, you’re no doubt preparing for this in insurance school.

Employers often offer life insurance as part of benefit packages provided to employees, though the benefit limits are not that high. This is generally because life insurance policies offered as part of employee benefit programs do not have medical exams. Higher limits may be offered, though the applicant should expect to undergo the medical exam.

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