Check your health status before buying insurance

Most insurance buyers are reluctant to undergo a medical test before buying an insurance policy. It may be the fear that the premium will increase after the test. But it is in the customer's interests to undergo a medical test, say experts. It can ensure better premiums and ensure hassle-free claim payout, since you have disclosed all details at the time of buying the policy. Let us understand how exactly a medical check-up will help.

When do insurers ask for medical test?

For insurance companies, a medical test is a risk assessment of the customer's profile. If the test is done and the customer's health is fine, then the price that is offered is one of the best offered in that pool, says Vineet Arora, MD and CEO, Aegon Life Insurance.

"From a customer's angle, it makes sense to go in for a medical test and prove he is healthy, and hence, he should be given the price as per medical underwriting. It proves that the customer has been transparent while entering into the policy contract, based on the medical test results and declarations in the application form,'' he explains.

In case of a life insurance policy, the insurer is trying to assess the current health of the consumer who may be buying a policy for, say 50 years. The pricing is based on the buyer's current health. "If someone is applying for a Rs 1 crore cover and paying a premium of Rs 10,000, the medical test will asses if the health is good enough to last out the policy term or if the customer will make a claim in the next five to six years. If the medical shows some anomaly, pre-existing disease or some disease that could become terminal, the insurer may either reject the policy altogether or charge a higher premium,'' says Tarun Mathur, chief business officer-general insurance, Policybazaar.com.

Medical tests may or may not be mandatory while purchasing a health insurance policy. "It depends on multiple factors like the customer's age, health declaration, including pre-existing medical condition and sum insured amount. Based on these conditions, the company may or may not choose to carry out the medical test,'' says Mayank Bathwal, CEO, Aditya Birla Health Insurance.

The sum assured is one parameter which determines if medical test is required. The higher the sum assured, higher are the chances of a medical test; lower the sum assured, lesser are the chances for a test.

It also depends on the physical condition disclosed to the company while buying the policy. In case the physical conditions are clearly mentioned in the proposal form and if the applicant falls under the age group of 45 or 50 years (this could vary from company to company), then the policy is processed (first level of underwriting). If not, the applicant has to go to either of the medical process, says Rakesh Goyal, Director, Probus Insurance.

"The first medical process includes the telemedical process which is a preset format that undergoes wherein questions are asked related to you and your family. After that, if the insurance company still has any concerns, it would ask the applicant to go for the proper physical test,'' he adds.

Who pays for the medical test?

In order to provide a smooth application and buying process, insurance companies have started conducting medical tests at the applicant's home, at a time of his convenience. In case it is not possible, the applicant is required to visit the network hospital of the insurer near his residence.

Whether the policy is purchased online or through an intermediary or broker, the criteria for medical test still apply.

In the case of life insurance plans, the cost of medical tests is borne by the insurance company. Under a health insurance plan, the cost is shared by the applicant and insurance company equally. However, there are some insurance companies that bear the entire cost of medical tests, hence check the same before applying for a plan.

Benefits of a medical test

The benefit of undergoing a medical test is that it establishes transparency from the customer. "This means that anytime during the claim, all the information was correctly provided to the insurance company so it will be a seamless process thereafter,'' says Arora, referring to the claim settlement.

There could be two policies in the market, one could be offering no medical test and another may ask for one. The one that asks for medical is better because the price for that product is better price because it is a less risk pool for the insurance company. Hence, it is in the interests of the customer to choose a plan that asks for medical test, Arora adds.

"When the insurer has all the required information about the applicant, they are able to issue a policy quickly. This information also helps in settling claims without any hassle and also at the earliest possible,'' says Mahavir Chopra, director - health, life and strategic initiatives - Coverfox.com.

If the medical test results show that the applicant is in good health, the insurer will charge standard premiums or can even lower it, Chopra adds.

If medical test is adverse or not done

If a customer undergoes pre policy medical check-up and certain health conditions are observed, the insurance company notifies the customer of such adverse conditions along with details of what medical conditions would be covered as per policy conditions. Before issuance of the policy the customer is notified of the coverage in the light of his/her medical condition and if the customer accepts the same, a policy is issued, says Bathwal.

In case a customer is suffering from a known or unknown ailment or condition, which he fails to declare at the time of policy application and has also not undergone any medical tests, then this would increase the chance of claim being declined by the insurer, says Biresh Giri, appointed actuary and CRO, Acko General Insurance.

In case a customer is diagnosed with an existing ailment or medical condition during a medical test, the insurer might offer to insure the customer at the same premium with specific terms, higher premium with standard terms, higher premium with specific terms, or may decline the policy.

PAYS TO KNOW HOW HEALTHY YOU ARE

• If medical test shows customer is healthy, then the price offered is one of the best offered in that pool
   
• Medical test establishes transparency on the customer’s part, so claim process will be seamless
   
• If test results show the applicant is in good health, the insurer may charge standard premium, or even lower it