Yes, life insurance policies often require proof of insurability. Still, the extent of the requirement can vary based on the type of policy, the amount of coverage sought, and the specific insurance company's practices. Here's a breakdown of when and how proof of insurability (or Evidence of Insurability, EOI) might be required:
Traditional Term and Whole Life Insurance: These policies typically require a thorough review of the applicant's health and medical history. Most applicants for these policies must undergo a medical examination, including blood tests, a physical exam, and possibly other tests. The insurer may also request access to the applicant's medical records.
Guaranteed Issue Life Insurance: This type of life insurance doesn't require a medical examination or detailed health questionnaire. It is usually available in smaller coverage amounts and might come with higher premiums because the insurer accepts a more elevated risk without a thorough knowledge of the applicant's health.
Group Life Insurance through Employers: Employer-provided life insurance policies often offer a base amount of coverage without requiring proof of insurability. This is known as a "guaranteed issue" amount. If an employee opts for additional coverage beyond the guaranteed issue amount, they may need to provide proof of insurability.
Simplified Issue Life Insurance: This type of policy typically doesn't require a medical examination but does ask a few health-related questions. The insurance company decides whether to approve the application based on the answers. Premiums for simplified issue policies can be higher than those for traditionally underwritten policies.
Increasing Coverage or Changing Policies: If a policyholder wishes to increase the death benefit or make specific changes to an existing policy, the insurance company might request proof of insurability.
Policy Renewal: Some term life insurance policies may require proof of insurability if the policyholder wants to renew the policy after its term expires.
While many life insurance policies require proof of insurability, options are available for those who want to bypass a detailed medical examination or health questionnaire. Opting for these can result in higher premium costs due to the increased risk the insurer takes.