A term insurance policy secures your family in case of your untimely death. A medical test is vital for buying a term policy as it helps the insurer understand your condition and customise the plan accordingly.
A Term Insurance Plan without a medical test may sound attractive and convenient, but derives no significant benefit to the policyholder. This clause is mostly used as a promotional gimmick by insurers to trap prospective buyers with an assurance of providing higher risk-coverage amount instantly.
However, this is not true, as no term plan can provide extensive coverage with better terms without medical tests. A term insurance policy is no ordinary insurance policy; it's an insurance policy that secures your family in case of your untimely death by taking care of all financial responsibilities.
The purpose of going through specified medical tests before buying the term plan is to help insurers determine your health condition and provide customised plans with better terms. Buying a term plan that doesn't require medical tests is not the best way forward as it does not cover all your risks and can have serious implications in the long run.
Let's understand in detail how a term insurance policy without medical tests limits the benefits and is not customer friendly.
Higher Chances of Claim Rejection
Buying a term plan without medical tests doesn't mean that you are exempted from disclosing all your health problems. Here, you need to voluntarily disclose all your health problems and make a statement regarding your health condition in the application form. Insurance providers follow very strict guidelines and a thorough investigation process to sanction any claim. If your health statement is found to be incorrect and inconsistent during the claim settlement process, your claim might get rejected on the grounds of information concealment.
Each year, roughly 2-3% claims get rejected by insurers due to this issue, which only aggravates the mental and financial woes of your family.
Low Risk-Coverage Amount
Term insurance policy with no medical tests are low-risk coverage plans, and the benefits available are limited to only Rs. 5 to 25 lakh with most insurers.
With no medical test term plans, the insurer has to compensate for the risks associated with unknown health issues that might have got diagnosed during a medical test.
With today's evolving lifestyles and inflationary situation, a low- risk coverage term insurance plan is inadequate and doesn't serve any purpose.
Risk-coverage is the sole purpose of term plans. Higher the risk coverage amount, greater is the peace of mind, because in your absence, it ensures your family is well taken care of.
Higher Premium Amount
The basic working principle of an insurance plan is to provide coverage against risks and lower the quantum of risk, lower is the premium amount, and vice versa.
So, in the case of a term plan, the insurer needs to know about your medical condition to determine the premium amount. If the medical report doesn't indicate any major health issue and you are physically fit, then your policy premium will be much lower.
If the medical report finds out any pre-existing medical condition, then it will be factored in the calculation of the premium amount. If you think buying term plans with no medical tests will fetch you better terms and lower premium, then you need to think again. The insurance companies factor in all such risks, whether you have a pre-existing medical condition or not, to calculate the premium, which may be often higher.
Why Do Insurance Companies Offer Term Insurance with No Medical Tests?
If there is so much risk involved with medical test-free term plans, then why do insurers offer such schemes to customers in the first place?
The medical tests specified by insurance companies are expensive and are borne by the insurer during the application process, adding to which is the fact that the entire process is time-consuming and tedious.
These factors drive customers away from buying a term plan with medical tests. Thus, in order to increase business and cut costs, insurance companies offer low-coverage term plans with no medical tests.
How Do Term Plans with Medical Tests Benefit Users?
Transparent Relation with Insurer
In insurance, the objective of medical tests is to ascertain your medical condition in detail. If you're diagnosed with any pre-existing condition, then you can mention it in your term plan application.
The insurance company will suggest a waiting period in the policy term relevant to your medical condition. It's always recommended to remain transparent with the insurers about your medical conditions and pay a higher premium amount, rather than having the claims rejected altogether.
The only aim of medical tests is to ensure that your family is covered during difficult times that could negatively impact their financial condition.
A full medical report consists of Blood Sugar, Haemoglobin Count, Cholesterol, ECG, Urine Test report, etc. Additional tests are required if the risk coverage amount is of a higher amount or if the user falls within a higher age group.
Insurers offer customised term plans according to your needs when you undergo medical tests.
These are term plans with a critical illness rider that generally cover critical illnesses like cancer, heart ailments, paralysis, and offer extensive medical as well as life coverage.
Proof of Low-Risk Medical Profile
Being physically fit and healthy is rewarding, and such people are an asset to the society as a whole. Going through a pre-policy medical examination and passing it with a good record, helps to establish your claim as a healthy individual.
You will be considered a low-risk customer by the insurer and will also be offered discounts in term policy premium amount.
A term plan, though taken for self, safeguards your family from uncertainties in your absence.
Buying a term plan with medical tests may require you to pay a higher premium, but it saves your loved ones from the hassles of the claim settlement process. The more you remain transparent about your medical history, the faster and easier the claims will be approved and processed. Just appearing for medical tests transfers all your risks to your insurance provider, and in case anything happens to you, the insurer will not be in a position to deny the claim.
The goal of term insurance is to leave your family with enough financial resources, so as to maintain a good lifestyle and help them achieve their dreams without compromises.