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Why is Medical History Important While Buying Term Insurance?
When purchasing term insurance, one of the most significant aspects individuals overlook is their medical history. Insurance companies use this information to evaluate risks and set premiums. Knowing the significance of your medical history will help you understand what choices you ought to make and help you avoid potential issues later on.
Here, we will explore how your medical history can affect the purchase of term insurance, its role in determining your premium, and why it is essential to be transparent in every aspect for smooth claim settlement.
Table of Contents
What is Term Insurance?
Key Components of a Term Insurance Policy:
- Premium: The amount paid periodically to maintain the policy.
- Sum Assured: The death benefit payable to the nominee
- Policy Term: The duration for which the policy provides coverage.
- Rider Options: Additional benefits like accidental death or critical illness coverage can be added to the base policy.
The Role of Medical History in Term Insurance
Medical history is an individual’s health record of previous illnesses, surgeries, medications taken, and any previously existing medical conditions. If you are buying term insurance, providing a detailed medical history is imperative as it helps the insurer determine your risk as a policyholder.
A detailed medical history also helps insurers determine if pre-existing conditions add to higher risks, impacting your premium. Please include important health information to avoid being detrimental in the future, especially when rejecting claims.
Impact of Medical History on Premiums
Pre-existing Conditions
Insurers may view you as a high-risk applicant if you suffer from diabetes or hypertension and may require higher premiums.Common Conditions Affecting Premiums
Illnesses like heart disease, cancer, and chronic respiratory ailments can significantly affect premium rates.Risk Assessment
Insurers use underwriting to assess your risk profile. The more medical issues you have, the higher your risk level and premium costs.Benefits of Being Honest About Your Medical History
It is not a moral obligation but a financial necessity to be transparent about your medical history when purchasing term insurance. Here are the multiple benefits of being honest about your medical history to your term insurer:
Avoiding Claim Issues
Being honest about your health helps insurers understand your medical history. This reduces the chances of your claim being rejected later because there are no hidden health problems.
Lower Premiums
If medical tests show you are healthy, insurers may give you lower premiums because healthier people usually make fewer claims. But if they find health issues, your premiums could go up.
Customised Policies
A clear health assessment allows insurers to offer extra options that suit your needs, ensuring you get the right protection.
Understanding Health Risks
Medical tests help insurers assess the risk of death from any existing conditions, ensuring the right coverage for your health.
Faster Claims
Giving accurate health information from the start helps you avoid delays or rejections when you finally make a claim to your insurer.
The Role of Medical History in Term Insurance Claim Settlements
Case Study:
Mr Arun purchased term insurance but did not reveal his pre-existing heart condition. Unfortunately, he died of a heart attack. The insurer investigated that claim and discovered Mr Arun had deliberately kept his medical condition secret. As a result, the insurer rejected the claim, leaving his family in a financial crisis.
This illustrates the importance of being transparent about your health while buying insurance.
What Medical History Documents are Required When Buying Term Insurance?
Medical Test Reports
Results of blood tests, ECGs, or any other relevant diagnostic testsDoctor's Statement
A certificate or report from your healthcare provider detailing your medical history.Prescriptions
A record of any ongoing medications.Hospitalisation Records
If you’ve been hospitalised, insurers may ask for discharge summaries or detailed reports.Illustration of Why Medical History is Important While Buying Term Insurance
FAQs about Medical History in Term Insurance
Why is my medical history important when applying for term insurance?
How does my medical history affect my term insurance premiums?
What types of medical conditions impact term insurance premiums?
Several medical conditions can affect your term insurance premiums, including:
- Chronic illnesses: Diabetes, hypertension, or high cholesterol.
- Heart conditions: History of heart attacks or cardiovascular diseases
- Respiratory issues: Medical conditions like asthma or chronic obstructive pulmonary disease (COPD)
- Cancer: A history of cancer or ongoing treatment.
- Lifestyle-related issues: Obesity or smoking-related health problems
What happens if I don't disclose my full medical history during the term insurance application?
What does a term insurer need to know about a person’s medical information?
What if I cannot get term insurance because of my medical history?
Do all insurers need a medical test before issuing a policy?
When applying for term insurance, do I need to submit my medical records to the insurance company?
Do I need to visit a diagnostic centre for a medical test when applying for term insurance?
Other Important Term Insurance Guides
Other Important Articles Related to Term Insurance
Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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