Why Are Medical Tests Important While Buying Term Insurance?

Term insurance is the most effective & widely accepted way of protecting your family financially in the unfortunate event of your early demise. After taking into consideration your income, expenses, savings, and loans/liabilities, you can calculate the required cover amount and select other benefits and features. Your annual premium is decided by the insurer based on the above selection & a few other parameters like your age, lifestyle, health status, etc.

As part of life insurance underwriting, it’s usual for the insurers to ask you to undergo certain medical tests (called pre-policy medical checks). The medical tests for term insurance are decided on the basis of your health declaration in the proposal form, age & total sum assured sought. But do insurers issue term insurance without medical test in India? We’ll find out - but before that let’s see what do term life insurance medical tests include. 

What do medical test for term insurance include?

For term insurance, medical underwriting is done in two steps - telemedical questionnaire and physical check-up/  diagnostics and radiological tests. Whether you will undergo only telemedical or both depends on your proposal form declarations, age, and chosen sum assured. 

Generally, insurers follow a system of medical grids. Each grid has a list of medical tests that could be diagnostic or radiological in nature. The grid that you are asked to undertake depends on your health declaration, age and sum assured. After submission of your proposal form, the underwriter conducts a telemedical round post which you are assigned a medical grid & asked to go to an empanelled diagnostic centre at a scheduled date/time. In term insurance, usually, the cost of PPMC (pre-policy medical check-up) is borne by the insurer.

So, which medical tests are required for term insurance? Well, some of the common tests that you undergo as part of a term insurance purchase are a complete blood count to check glucose level, blood pressure, cholesterol levels, etc, and a urine test to check indications of nicotine, tobacco, or drug use. Additionally, the insurer may also ask you to undergo other tests such as a kidney function test, treadmill test, liver function test, etc. 

Why do insurers ask for medical tests before issuing a term insurance policy?

Medical tests help the insurers determine the long-term risk associated and they are so designed as to help give deeper insights into your health & lifestyle habits. 

If your medical reports showcase that you are a healthy individual, you are categorized as a standard life and the insurer will approve your term insurance proposal at standard prices, without any change in terms and conditions. 

However, if your medical tests show sub-optimal results, you are likely to be categorized as a sub-standard life & the insurer charges a higher premium to cover your life. They may also add other restrictions in your policy or at worst may reject your term insurance proposal.

Importance of Term Insurance Medical Test: How can undergoing Medical Tests benefit you?

Besides helping insurers estimate the risk they are going to cover, undergoing medical tests before purchasing the term insurance policy will help you declare all your existing medical conditions honestly and accurately, thereby reducing the chances of your family's claim getting rejected. 

What will happen if you hide or provide the wrong details to the insurer? 

Medical tests conducted for a term or other insurance policies don’t give you a free pass to make false declarations in the proposal form. If you intentionally try to hide or provide incorrect details in the proposal form and the insurer finds out later, they can decline your family’s claim on grounds of misrepresentation of facts despite you paying several premiums. And given the nature of term insurance, you’ll be completely out of the picture at the time of claim settlement. 

Therefore, in case you missed informing the insurer about a disease or a health condition, make sure you inform them as soon as you realize this. They will re-evaluate your policy and decide to either charge more premiums and continue the policy or cancel it altogether. 

What about protection under Section 45?

As per Section 45 of the Insurance Act, insurers cannot reject a death claim under any life insurance policy after the first three years on grounds of either fraud, misstatement, or suppression of facts. 

While this seems like a great benefit for us - the customers, it makes it tricky for the insurers. They would never blindly settle the claim without investigating. If they find anything suspicious, they'll put the claim in dispute and hold the claim settlement or postpone the claim indefinitely - since they cannot reject the claim. 

Hence, it is better to disclose all important details to the insurer - even if it means the insurer might decline your policy or request an additional premium than to leave your loved ones with a risk of claim rejection when you’ll not even be around to make any amends. 

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