Term Insurance Medical Test and Its Importance

COVID-19 has taught everyone around the world that life is uncertain and full of unpleasant surprises. You can never be too cautious or too prepared for such surprises that may come from anywhere.

If you are the primary, and most likely the only, bread-earner, it is your moral and financial obligation to safeguard the family's financial interests. You must ensure that you fully meet their financial needs even when you are no longer around.

A term life insurance plan is the most cost-effective way to ensure that at least it will meet your family's financial needs in case of an eventuality. With a term insurance plan in place, you can focus on other aspects of your financial planning – marriage, home, investments, children's future, and retirement.

It is impossible to put a price on the life of a loved one and more so on the life of the family's sole bread earner. But as a rule of thumb, live insurance coverage must be at least 15 to 20 times your current annual expenditure. A better coverage would be 15 to 20 times your current annual income.

With term plans, you get the following benefits:

• Low premiums
• Financial security for family
• The flexibility of cover, tenure, and premium frequency
• Tax benefits u/s 80C
• No brokerage or commission
• Benefit from riders

Relevance of term plan medical test

One of the most critical aspects of buying a term plan is a medical test for term insurance. Although many online/offline term plan policies do not require a term insurance medical test in India, there are many exceptions to those as well.

The following reasons necessitate a term plan medical test :

Insurers decide premiums based on it

Based on the term insurance medical test results, the insurance company would ascertain your health condition and risk profile. Based on those assessments, they will decide your premium. If the insurer perceives that your risk perception is high, it may offer you the insurance cover at a higher premium. If you are healthy, then you can get a better deal in the form of lower premiums.

Higher probability of claim acceptance

If you truthfully disclose your medical condition and accept to undergo a term insurance medical test, the chances of your claim's acceptance go much higher. One of the top reasons for the rejection of claims is not disclosing your pre-existing medical conditions.

Necessary for higher cover

All insurers have a ceiling for sum assured amount beyond which they mandatorily require all lives insured to take the term insurance medical test. This ceiling may differ from one insurer to another. However, in case the insurance buyer has any kind of pre-existing medical problems or illnesses, then he or she will have to take medical exam at the time of purchasing a policy.

Necessary after a specific age

Finally, most term covers, if policy is purchased before a certain age, say before 40 or 45years of age, do not require a term plan medical test. But if you have crossed that line, then a medical test for term insurance becomes mandatory.

Understanding risk perception

Risk perception is an estimate by an insurer about the probability of making a claim during the policy tenure and the resulting liability.

Your policy premiums are directly proportional to your risk perception. By undergoing a medical test for term insurance, you can understand why they charged a higher premium or why they rejected your policy proposal.

To keep the risk perception low:

a) Take a big enough cover as early as possible – preferably in your 20s or 30s.

b) Buy the term plan for maximum coverage and the most significant possible tenure.

c) Maintain a healthy lifestyle and keep your body weight in check.

d) Avoid all addictive habits like smoking, tobacco, alcohol, etc.

e) Truthfully declare any pre-existing medical issues and family's medical history.