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Whether you choose permanent life insurance or term life insurance, you will need to go through the underwriting process. This is how the insurance company decides how much of a risk you are and how much of a death benefit you qualify for. The insurance company collects information about your health, job, income, finances, and other personal information to determine how much it will insure you and what your premium will be.
The underwriting process can take four to six weeks or even longer. If you have no previous life insurance policy in effect, some insurance companies provide conditional, or, temporary life insurance until the underwriting process is complete.
Traditional life insurance policies require a medical exam, which includes the collection of a blood and urine sample, as part of the underwriting process. A urine test will reveal drugs, nicotine, and other health issues. The exam is paid for by the insurance company as part of the underwriting process.
People with certain pre-existing health conditions may be ineligible for traditional life insurance — in which case they should consider no medical exam life insurance. As the name implies, this type of insurance doesn’t require a medical exam.
With a life insurance urine test, the insurance company sends a paramedical professional to your home or business to perform the exam. The medical exam, also known as a paramedical exam, can take up to 30 minutes and usually includes a blood and urine sample, plus taking your weight and blood pressure.
For the urine sample, you will use a cup like you would at the doctor’s office during a physical. The cup has a temperature strip that helps determine if the urine is genuine and fresh – to prevent using someone else’s urine or synthetic urine.
It’s recommended that you fast before the exam, so early appointments are best — otherwise, you’ll have to fast most of the day for an afternoon appointment. Your samples are sent to a lab and you are given a code to check the results.
If you have health issues like high blood pressure, cholesterol, diabetes, or a family history of cancer or heart disease, the insurance company may request your health records from your attending or primary care physician. This will make the underwriting process longer, as the insurance company waits to receive your medical records from your doctor and review them. If your medical records indicate other health concerns, expect follow-up calls from the insurance company.
Not knowing your medical history means the insurance company is taking a gamble on your health. As a result, death benefits for no medical exam life insurance are limited, typically with a more expensive premium than insurance with a medical exam. Plus, no medical exam life insurance is only available for a limited term — no more than 20 years.
Getting a medical exam with a urine test and blood sample helps lower your premiums because the underwriting process can better determine your level of risk.
It’s important to answer truthfully on your life insurance application. If it’s discovered that you lied on the application or failed to disclose important facts, the insurance company can invalidate the policy, and your beneficiaries will not receive your death benefit.
Also, your blood sample and urine test will reveal whether there drugs, nicotine, or other health problems exist. In your initial life insurance application, you are asked about your medical history and if you are a smoker, have a felony record, or mental illness. If you answer yes to any of these questions, you should expect a follow-up call or additional questionnaire about your family medical history before your medical exam is scheduled.
If you answer no to the initial medical questions, you will receive an email or phone call from a representative to schedule your medical exam.
Based on your urine test and medical exam, you are assigned a risk assessment category. Once your risk is assessed, your life insurance premiums are calculated based on your risk and you are issued a policy.
Here’s an overview of the different risk classifications used by insurance companies:
Data sourced from NAIC and Quotacy
If you are denied life insurance coverage for health reasons, consider these alternatives:
- Group life insurance: A term life policy offered by employers to employees. That means that all employees are accepted. One disadvantage of employer-provided group life insurance is that if you leave your job (resign, retire, or are terminated), you lose your coverage.
- No medical exam life insurance: A policy with a low death benefit and sometimes a two-year waiting period before paying out to beneficiaries. Check the guaranteed and simplified issue no medical exam policy mailers that might arrive in your mailbox from AARP, Colonial Penn, or Mutual of Omaha.
- Annual renewable term life insurance: Short-term coverage. A one-year policy is cheap compared to a traditional term life policy. It is renewed at the end of each year, and your premium usually increases as you age. Although your premium may increase each year based on your age, you will not have to have a medical exam every time you renew, according to Fidelity Life.
- Final expense insurance: A type of guaranteed issue policy that can be term or whole life, with a low death benefit that covers funeral and burial expenses.
- Find life insurance companies that specialize in “high risk” applicants. This will require some work and research because “high-risk” can mean you are a smoker, felon, or have health issues.
Ronda Lee is an associate editor for insurance at Personal Finance Insider covering life, auto, homeowners, and renters insurance for consumers. She is also a licensed attorney who practiced litigation and insurance defense.