BackThe relevance of medical history for insurance
It is in the best interests of the policyholders to disclose their full family medical history
PremiumInsurance proposal forms are onerous. A few insurers insist on recording detailed family medical history for health and life insurance. This question is often open-ended and the proposal form has limited space to answer. The objective is to capture your families’ current health status. However, a prospective buyer is unsure of what is expected: What level of detail is expected? How far back in time should one go? Most people after the age of 60 would have developed some medical conditions. So, are they supposed to share details of each and every ailment? Buyers are unsure of the impact of such disclosures on their proposal. A number of agents would advise to just write ‘good’ as the current status. Would this brevity impact their claims later?
The good news is that while insurers collect this information, it mostly has little impact on underwriting of the proposal and issue of the insurance. Family history, along with other information such as the industry in which the person is employed, do not make a material difference to the proposal. Seldom would an insurer apply a loading on premium or decline a proposal because of an adverse medical history of parents. This is true even for ailments with strong hereditary tendencies such as diabetes, and cardiovascular conditions. Unless, the individual is showing early signs of developing those conditions themselves e.g., being pre-diabetic or having high cholesterol, insurers do not rate the proposal differently.
The purpose of collecting such information is more for profiling and advisory. When a policyholder fills such information, it facilitates a more thorough needs analysis. Individuals with adverse medical history have an extra onus to be fully covered. For example, people with cancer history in their family are strongly advised to buy cancer-specific coverage, in addition to the standard health insurance plan. Similarly, it makes sense for people with a family history of coronary diseases or paralysis to buy a comprehensive critical illness cover. Given the rising incidence of such diseases, such plans are generally recommended for everyone to buy, more so for people with some medical history.
There is a flip side to non-disclosure of such information. At the time of claims, insurer may say that there has been a breach of full disclosure and repudiate the claim. It is common for doctors and hospitals to mention the family medical history on prescriptions and discharge summaries. On review of such documents, insurers generally compare this with the disclosures made in the proposal form. A non-disclosure is an immediate red flag and leads to disputes in claims. As a good practice, one should disclose any major health conditions suffered by parents. This could include a bypass graft surgery, a chemotherapy or a diabetic condition.
To ensure that such non-disclosures should not become a bone of contention for policyholders, regulations also have a few safeguards. Both health and life insurance policies are subject to a non-contestability clause. Under this clause, after the specified period, insurers cannot contest wrong or incomplete disclosures made by the policyholder, unless it is a case of fraud. The onus of proving that fraud rests on the insurer. For health insurance, this is eight years, and for life insurance, it is three years.
Globally, insurers are trying to come up with predictive underwriting capabilities. Experiments are underway to assess probabilities of certain diseases based on gene analysis. When such models are fully developed, such information can prove highly valuable for better advisory to policyholders and underwriting for insurers. While, we are still a few steps away from such sophistication, it is in the best interests of the policyholders to disclose their family history fully to avoid any disputes at the time of making claims.
Abhishek Bondia is principal officer and managing director, SecureNow.in.
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