Before approving an applicant for life insurance, most companies require a medical exam. Your premium amount largely depends on your current and past health.
While the company can call you in for a health inspection, you can save time by providing complete records of your medical history. If you choose not to provide, the insurer has other ways to track down your records.
Underwriting Process
Underwriting is a process in which the insurer determines your risk for dying. When you apply for life insurance online, you have to answer several questions about yourself.
Based on your answers, the company provides you with an initial quote. The initial quote is simply an estimate of what you will have to pay, whereas the final quote is the exact amount.
Insurance companies use underwriting to gather information and determine how much they should charge you. This process varies depending on the type of life insurance you applied for. There are four main types: full underwriting, accelerated underwriting, simplified issue, and guaranteed issue.
Full Underwriting
This type of underwriting is relatively long as compared to accelerated underwriting. It consists of a lengthy questionnaire and a life insurance medical exam.
They rely on third-party sources to gather information, and the process can take up to 60 days. It is usually worth it as full underwriting allows the insurance company to provide you the best price, provided you are in good health.
Accelerated Underwriting
This type of underwriting is also called no-exam underwriting. It is similar to full underwriting, the only difference being that there is no need for a medical exam.
Accelerated underwriting is priced differently using certain full underwriting companies such as fabric and ladder. These companies use specialized technology to collect information about you and provide fast life insurance within just a few minutes.
Simplified Issue
This type of underwriting process only asks the individual a few basic questions. However, due to the nature of these questions, answering yes on any of them may disqualify you from coverage. As this type of underwriting requires less information, the result is a more expensive premium.
Guaranteed Issue
In guaranteed issue life insurance, you cannot be turned down. There is no medical exam. However, it is also the most expensive type of life insurance. It is ideal for those individuals whose health prevents them from other types of life insurance.
Access To Medical Records Act
Life insurance companies often require a medical report from their General Practitioner. This report can include details of any meetings with doctors or healthcare professionals. You have the option to read it before sending or just directly send it to the insurance company. You can even ask your doctor to make amendments, or you can flat-out deny them permission to send it.
If your doctor refuses to make amendments, you can add personal comments to the report. Under the Access to Medical Records Act, the doctor can withdraw any information he believes may cause harm to you or others.
HIPAA
HIPAA or the Health insurance Portability and Accountability Act was passed in 1996 by the federal government. This act ensures that you have a right to access all your own information as well as the right to privacy.
This act ensures that your private information will not be shared by businesses that have access to it; however, it does not apply to life insurers. It applies to entities such as doctors, clinics, and hospitals.
Minimum Necessary Rule
Any entity covered by the HIPAA rules can share information only to treat you or getting paid.
As stated on the site, covered entities must reasonably limit the amount of information they disclose. They must only release enough information to accomplish the intended purpose. Health insurers are an example of how the HIPAA works. Those working in health insurance can read your medical records to ensure your claim is payable.
Sometimes, many records require reviewing to make a proper decision. They can only read your records for professional reasons. If they read your records for entertainment purposes or unnecessarily, they will face repercussions and even termination. Records concerning cancer treatments are not required to determine if a claim is payable.
They should only request such records when they have a compelling reason. In essence, the minimum necessary rule ensures access to the bare minimum of records.
Legal Permission
Under HIPAA, you have the right to share your medical records as you see fit. This means you can sign papers giving providers full legal authorization to access all your records. This may be a family member who is helping to take care of you or an insurance company so they can provide the best price. Without signing, the company cannot legally obtain all your records.
Therefore, if you sign an authorization, an insurance company can legally request your medical records and receive them. If you wish to keep some information private, make sure you mention it in the contract before signing. It is important to allow life insurance companies to access your records that aren’t too personal so they can properly assess your risk for dying.
However, there are certain things a life insurance company does not need to know, such as if you have ever encountered sexual harassment. Keeping this type of information does not harm the life insurance company but rather promotes personal privacy. You have the complete legal right to privacy of these types of information.
Information Release Form
During the underwriting process, insurance companies often require permission for a health care provider to release your personal records. When you sign the application, it gives the insurance company authorization to access all your medical records. If you do not comply, it is unlikely the company will write the policy.
How Far Back Do My Records Go?
Usually, Medical records are kept for between 5-10 years after the final treatment; however, this varies depending on the patient’s age and the type of hospital.
Insurers are more interested in the last five years and want to check if you are clear of any conditions. If you suffered from any pre-existing conditions, the insurers would want to know how long have you been free of symptoms.
Electronic Health Records
Electronic health records have completely changed how life insurance companies gather information. By using electronic medical records, they free themselves from the need to use phone or fax. Before electronic health records, you had to request a physician statement.
If an insurer wants to get medical records, your application will include a special consent form, the HIPAA-compliant consent form. Upon signing, you allow the insurance company to gain access to your health records.
Since 2014, all health care providers must maintain electronic health records. This allows life insurance companies to quickly access your records and speed up the application significantly. In certain cases, electronic health records can remove the need for a medical exam.
How To Protect Your Privacy?
Most individuals do not have all their medical records available from one source. One method to protect your privacy is to give the company a copy of the medical records instead of an authorization to request those records. Another method is giving authorization that only allows medical records and not any psychiatric records from your therapists.
How Insurance Companies Gather Personal Data?
Insurance companies can gather personal data from various sources to properly assess your risk of dying. Here are just some examples of what insurance companies can use.
The Medical Information Bureau
The MIB, or Medical Information Bureau, is a vast database of information that insurance companies share. It provides the insurer with information about applicants who apply for either life insurance or health insurance policies.
A standard MIB record contains information relating to specific lifestyle choices and medical conditions. It does not contain your complete medical history and is not subject to HIPAA. However, if you are denied life insurance based on your MIB report, you do have certain rights.
They collect data from both people’s health and life insurance applications. If you have applied from a MIB member company in the past, other MIB companies can gain access to your application and cross-check both applications. You can also request a copy of your MIB file. All MIB companies have access to your past applications to help them assess you.
Retrieval Of Credit Report
Under the Fair Credit Reporting Act, insurance companies can pull your credit report. Insurance companies use this report to assess whether or not you are eligible for a new policy or if you can renew an existing policy. This credit report is useful for determining premiums.
Pharmaceutical Database
If you state on your applications that you take medication for anything ranging from high blood pressure to depression, life insurance companies can use third-party companies to check your prescription drug history. This can help the company assess if you are addicted to any type of medication.
Motor Vehicle Report
Some people wonder why life insurers check your motor vehicle report. The reason is that speeding tickets and DUIs can show that you may be a high-risk as a policyholder. Life insurance companies have to check every aspect of your life to properly determine your risk.
Financial Statements
When you apply for any insurance program, the insurer wants to determine if you’re capable of paying your insurance premiums. The same applies to life insurance programs. They will check the additional information to paint a picture of your financial situation.
If you apply for a high-paying insurance policy, the company will look at your tax returns, income statements, and assets. This can prove to the insurer that you can pay your premiums.
Social Media
In this day and age, social media has become an extremely helpful tool for companies to assess any individual. Your social media accounts can give some clue as to your lifestyle. Most companies use Google during their underwriting process.
Certain companies go as far as to check Facebook, Instagram, or Twitter.
How Insurers Use All This Data?
Insurers will use all types of information to assess your risk group, thus determining your premium.
For example, if you smoke, are overweight, or have chronic health conditions, you will have to pay higher premiums as compared to the non-smoker, young, and healthy individual. You must work with those life insurance agents who can provide you with a list of the best insurers based on your personal information.
Can My Records Be Checked After I Die?
Technically, life insurance companies can check your records after you pass away. However, they require permission from someone authorized to act on your behalf for a claim.
Before deciding on a claim, life insurance companies investigate the cause and timing of death. They also may look at any documents the deceased left behind.
Conclusion
Life insurance companies can access your medical records to an extent. Under the HIPAA, they can only access records that are necessary to dispute a claim. This protects your personal privacy, so companies that illegally try to obtain this information can face legal repercussions. Your privacy is never at risk since specific laws protect your information.
Whenever your doctor sends your medical records, you have an option to read them beforehand and add your own personal comments. The only situation in which insurance companies can have full access to your medical records is if you sign a contract permitting them to do so. Otherwise, life insurance companies can only access a limited amount of medical records.
Instead of the life insurance companies requesting authorization for your medical records, it is preferred to hand the companies documents of your medical records. This ensures the best premium is achieved for you.
