Recently, I have a client who got deferred because she was very thin. Because of her weight, she was made to undergo a chest x-ray before admitting her application.
True enough, after the chest x-ray, she was found to have a PTB (Pulmonary Tuberculosis) hence, her application was deferred.
From the above example, there are 2 things that happened, 1 good and 1 bad.
Bad – her application for her insurance policy was deferred for the meantime.
Good – the client was made aware that she has an active disease at this point in time, which is PTB. That is one thing to be thankful for. Knowing that, she can prevent a more complicated disease if not treated sooner and she can do the necessary precautions so that her family will also be protected from her communicable disease.
Oblivious to many, the right time to get a life insurance policy is crucial because when you are getting a life insurance policy, it is much like applying for a job, they will require you to undergo medical examination to see if you are physically fit for the job, from there, along with other considerations. Then they will decide at the end of the day if they will employ you or not.
As each application for life insurance is submitted, it goes to what you call “Underwriting Process” where underwriters evaluate each application, weighs the risks of each person applying before they actually approve or reject it.
To make you understand what I am saying, look at the image beneath. Among these 3 men, who do you think has an average risk? Who do you think entails more risk?
As you can see, one is very very thin, the other one is average for its height and weight and the latter is obese. The very thin and obese ones could entail more risk than the average one. Factoring in, many diseases that predispose them associated with their Body Mass Index (BMI) like malnutrition, tuberculosis, hypertension, and diabetes, etc.
The more risks a person has, the higher percentage he has of dying much earlier than the average person which will definitely affect the approval of the policy.
Not just in the physical attributes and presence of any pre-existing diseases do insurance companies evaluate each application. They also look at the following:
- Profession/Work– is your profession/work endangers your life?
- Risky behaviour/hobby– do you have hobbies that are risky, like hazardous sports?
- Place of Residence/work – do you live or work in a place where there is obvious danger?
I will be discussing above on my next posts.
After careful evaluation they can either:
- Approve – Standard rates
- Approve but with exclusions
- Approve but Rated
What do those mean:
This means your application has been approved at a standard rate of a normal average person at that age. Congratulations! You can pay the standard rates or premium.
APPROVED, BUT RATED
This means your application has been approved, but your premium is higher than the standard person.
You may have one or more risks that made you deviate from the norm/standard. Anything that will make you deviate from the standard will increase your chances of dying much earlier than a normal person with an average life span which becomes the reason of the higher price/premium.
APPROVED WITH EXCLUSIONS
Your application for life insurance is approved, but they have excluded some causes of death that may happen due to a pre-existing disease or an existing risky hobby/behavior.
Eg: You are a mountain climber for 3 years already, before you applied for a life insurance.
Your policy may be approved at standard rates but any death resulting directly from “mountain climbing” is excluded from the benefits (this will be stipulated in the policy contract).
Deferred means you are not approved today, but you still have a chance to be approved later on.
Eg: You have been diagnosed with PTB (Pulmonary Tuberculosis), thus you may be deferred from your application but they usually evaluate you again after six months with the “Go signal” of your attending physician that you are completely healed.
This is the worst possible case scenario. Your application is declined due to extreme or high risks that are too much as evaluated by the underwriters and perceived by the insurance company.
If you get declined due to a medical reason in one insurance company, there is a high possibility of not getting it from another company, even if you didn’t told that you were previously declined.
All rated, deferred and declined applications due to medical reasons will be submitted to the MIB (Medical Information Bureau) which centralizes medical information from all insurance companies and file it for retrieval by other insurance companies.
It’s like your Credit Score in terms of getting a life insurance.
This means, there is no shopping around, “if you get declined due to a medical reason in one insurance company, there is a high possibility of you not getting it from another company because of this even if you don’t tell that you were previously declined”.
As they say,
“Your money does not buy the Life Insurance, your Health Status does.”
The earlier you get it the better, where:
- The premium is much lower,
- You are healthier,
- You might still do not have the high blood pressure, or hereditary disease your whole family has.
So, if you ask me, “When is the right time to get a life insurance policy?” The answer is “Yesterday.”
If you are like most of the people I know, and you turn down all the insurance agents that came to you. Well, think again, because, by the next time, they might be the one turning you down.
Are you certain you are still insurable right now?
Ready to get one?
Contact me here or any of your insurance agent friends.
For your Financial Health,
- Top 10 Life insurance companies in the Philippines: Most Updated and Most Unbiased Review
- The Difference between Pre-Need and Life insurance companies
- 5 Insider tips on getting the best Life insurance / Financial Advisor for you
Disclaimer: Cases above are true cases but, underwriting is done on a case-to-case basis. Sample cases above may have different turn-out depending on underwriting process and evaluation.
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