What is Evidence of Insurability?

Evidence of insurability is something that may be required when people apply for certain forms of medical and more commonly life insurance. Basically, it means that people fulfill standards, as set by the insurer, that do not pose significant risk to the insurer. It could also be called fitness to receive insurance based on the company’s standards, and it is often proven through things like medical exams.

Some life insurance plans with low payouts don’t require any form of evidence of insurability. People may hear these advertised as requiring no medical exam. They still may ask questions to which an applicant must truthfully respond. These could include questions about smoking, height/weight ratio, evidence of any major illnesses, and other things. When the person finishes a questionnaire, the insurer has this “evidence” and can determine whether or not to offer an insurance plan to the person, and at what price they’ll do so.

There are many companies that offer life and health insurance to employees, and they may have no evidence of insurability requirements. This may be one of the principle benefits of company-sponsored insurance. Especially with medical insurance, an employee can’t be excluded from enrollment if he or she works full time and all other employees are enrolled, even if the employee has multiple medical conditions and is in poor health. Depending on the regional and local laws, some companies may be able to put a hold on covering pre-existing conditions for a set period of time in health insurance plans.

With life insurance offered by a person’s employer, a certain amount of coverage is typically offered without evidence of insurability. Sometimes policy amounts may be quite generous, but employees can only access the upper limits of the policy if they submit to medical exams or fill out additional forms. This would still give an employee some coverage in lower amounts, but might make it difficult to obtain higher levels of coverage. Again, this is not necessarily the rule, and some employers never make this request.

The idea of evidence of insurability may be differently interpreted by insurers or in a variety of unique settings. Each company bases its concept of the “coverable” person on the degree of risk that person poses. Obviously the person least likely to ever need life, disability and/or health insurance is most favorable and has the best chance of getting inexpensive policies. He or she lines the pocket of the insurer without costing a dime.

Over a lifetime, the client tends to become less favorable, acquires a health problem or two, and ages, which means death is more likely to occur. Unfortunately, even lifetime customers may lose their favor with insurance companies as they run greater risk of needing the insurance for which they’ve paid. They are likely to see increases in costs or have difficulty providing satisfactory evidence of insurability in the future.