Why do life insurance companies care about your medical history?
[social_share]A person’s medical history is often seen as being very private, so there can be some outrage when a life insurance company seems to take a close interest in the medical history. It can also seem to be very unfair when a person has a medical condition which they can not help, and then they seem to be penalised for it financially in their life insurance. This means that it can be of some interest when a life insurance company asks about medical insurance.
There is a simple reason why life insurance companies are interested in a person’s medical history. Life insurance companies are in the business of assessing risk. If risk can be accurately assessed then it can be pooled into large groups. In these cases the risk can then be spread around people. If the risk is not accurately assessed then a person will find themselves in the wrong pool and then can find that they are either paying too much or too little.
If a person is paying too much for life insurance then they will go to another life insurance company that charges less, so hurting the sustainability of the life insurance company. If the person is paying too little for their life insurance then they will find that their pool costs more than the premiums, which will also affect the life insurance company’s sustainability. This affects both mutual and for profit life insurers.
There are a number of risk areas, such as age, gender, lifestyle and even educational attainment (the higher the level of educational attainment, the longer the person is likely to live). One of the strongest indicators of future risk is the previous medical history. This means that a life insurance company is very interested in medical histories.
There are two things that life insurance companies are interested in. The first, and most important, is if there has been a history of serious diseases. This is because these diseases are statistically far more likely to occur to a person who has had the disease before than someone who has never had it before. This also means that life insurance companies are interested in current medical conditions such as diabetes.
The other thing that life insurance companies tend to be interested in is whether the person has a family history of certain illnesses as a family history can be another large risk area.
