Importance of Medical Test in Term Insurance

by Vinaya HS on January 25, 2016

in Finance

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Insurers put out advertisements that say “no medical tests needed” to entice prospective buyers. However, before you get taken in by these advertisements, just ask yourself if buying insurance without medical tests is really plausible and worth the risk?

The primary reason for undergoing medical tests is to check the health condition of the applicants. Depending on the results, insurers provide customized plans to buyers. If you avail term coverage without medical tests, there are many risks with negative repercussions in the future.

  • Higher Probability of Rejection: Just because you do not have to take medical tests when buying the policy, does not mean that existing conditions have been successfully hidden. You will need to declare your current health condition while filling the application form. Even if you are able to hide existing conditions, there may be consequences when making claims. Approximately between 2% and 3% of claims each year are rejected for this reason.

  • Higher Premium: Insurers base the premium on the perceived risks and undergoing a medical examination before availing online term insurance can help reduce the premium. If two applicants apply for the plan without a medical examination, the premium is the same. However, if with medical tests the result is favorable for one while unfavorable for the other, the healthy person is rewarded for good health with a lower amount. With medical fitness certificates, applicants can reduce the cost of availing term plans.

  • Lower Risk Coverage: Quite often, term insurance policies that require no medical tests are of a lower value. Even for applicants who are healthy and young, insurers will not provide insurance cover exceeding INR 5 lakhs. Therefore, if you want to procure higher insurance coverage, you will have to undergo the medical examination.

A full medical report includes blood pressure tests, echocardiogram, blood count, and fasting blood sugar. Some insurers may also require liver and kidney tests. These tests are aimed at determining current health status and presence of any conditions in the applicants. When the test reports are normal, insurers are able to lower the premium rates because the perceived risks are lower.

Moreover, if there are any existing conditions, these are known to the insurance company and accounted for with a higher premium charge. If the conditions are not known while availing the policy and the insured was to pass away due to the disease, there is a high possibility of the death benefits not being paid to the beneficiary. Therefore, individuals are strongly advised to not avoid or ignore medical tests before they avail term life insurance plans.

About HDFC Life

HDFC Life, one of India’s leading private life insurance companies promoted by HDFC Ltd. & Standard Life Ltd., offers a range of individual and group insurance solutions. HDFC Life’s product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment and Health.

Further reading:

  1. 5 Myths Surrounding Term Insurance

Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

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