Why do insurance companies ask health questions?
If you've looked into health insurance you've likely noticed plan options with 'no medical questions asked'. These plans are often heavily promoted by insurance companies. It's simple to apply and coverage is guaranteed. Sounds pretty good, right? Well, maybe. If you're healthy, a medically underwritten plan - a plan that asks health questions - is almost always better for you. Read on to learn which plans ask health questions and why it matters to you.
What is 'medically underwritten'?
A medically underwritten insurance plan is one that asks health questions when you apply. An underwriter reviews your answers to these questions to determine eligibility, premium (your costs), or if there will be any exclusions from your coverage based on your health. Because the insurance company can review you health history to assess potential future healthcare needs prior to acceptance, these plans can offer better coverage for less. In contrast, a guaranteed acceptance plan does not ask health questions.
Why do insurance companies ask health questions?
- 1Risk Assessment
Health insurance is all about managing risk, for plan members and the company. When an insurer asks health questions, it can better estimate risk associated with insuring an individual, in particular the risk that someone with a pre-existing condition will require future care and therefore cost more to cover. Of course, many people will require expensive healthcare - that's the point of insurance - but if the plan primarily enrolls people who are less likely to experience high health expenses, the overall expenses the plan must pay out will be less. This translates to lower cost for the plan members. - 2Underwriting
This is the process in which the insurance company evaluates the information provided by an applicant to determine eligibility and rate. Depending on the health of the applicant, coverage may be approved, offered with exclusions or an adjusted rate, or declined. - 3Price
Insurance premiums are set based on the risk factors associated with the plan members and history of claims paid by the plan. Rates are adjusted for a variety of reasons, including a change in overall claims within the plan, age of a plan member, or existing health conditions. - 4Fraud Prevention
Believe it or not, fraud is a serious problem in the insurance industry. The health information provided at the time of application can help prevent future illegitimate claims, which increase costs for both the insurance company and plan members.
What type of questions are asked?
Health insurance applications ask about your current and past health, whether you have been diagnosed with or sought treatment for any health conditions, whether you are taking any prescription medications, or expect to receive treatment in the future. Questions generally cover both physical and mental health.
Do you need to get a medical exam?
No. Medical exams are not typically required for health and dental insurance. Some life insurance policies do require a medical exam prior to approval, but many do not.
Who should apply for a medically underwritten plan?
Anyone in general good health should apply for a medically underwritten plan instead of a guaranteed acceptance plan. Medically underwritten plans are far better value than plans with no medical questions because they offer more coverage for less money. If it turns out you don't qualify for the underwritten plan your advisor can help you find an alternate option.
Who should apply for a guaranteed acceptance plan?
Guaranteed acceptance plans are a good choice if you have existing health expenses and are not eligible for a medically underwritten plan. While coverage maximums are lower, these plans can still cover a portion of your current expenses and offer additional protection for other health needs that arise. Unfortunately, many insurance companies push guaranteed acceptance plans to people who don't need them to help protect their bottom line. When healthy people without costly current health expenses join a plan, it keep claims lower and boosts insurer profits.
Why didn't I have to answer health questions to join my workplace plan?
Group insurance plans offered through an employer have different rules than individual plans. All full-time employees must be allowed to participate regardless of their health history. The risk of high claims cost is taken on by the employer who is responsible for any increased rates the insurance company charges.
Shouldn't health insurance be available to everyone regardless of health?
Health insurance is available to most residents of Canada through the provincial government. Private health insurance is meant to supplement the limited coverage provided by these government plans and guaranteed acceptance plans are available to everyone regardless of health history.
Will my health information stay private?
Yes, When you complete an application, you release your information to the insurance company for the purposes of determining your eligibility and administering your policy. Your personal information is not shared with third parties not directly involved in the administration of your insurance.
What if I leave out some health details when I apply? Will I get better coverage?
When you complete an insurance application, it is important to answer all questions honestly and completely. Not doing so could constitute insurance fraud and may result in coverage limitations, termination of your coverage, or even legal consequences. It's also important to remember, your insurance advisor wants to see you covered. The information you provide helps the advisor find the best plan that matches your needs.
Are Health Plus PRIORITY and OPTIMUM plans medically underwritten?
Yes. Health Plus plans require a health questionnaire to apply. However, Health Plus treats pre-existing conditions differently than other providers. In many cases, people with pre-existing conditions qualify for coverage at an adjusted rate that covers existing medication and treatment. Other plans typically exclude the pre-existing condition and any related treatment entirely. Plus, if you're self-employed, the extra premium is also tax deductible. The best way to know if you qualify is to apply. There is no commitment on your part until we confirm your coverage and rate with you, and you give us the go-ahead to enroll you in the plan.