If you want to take out life insurance cover, it might seem logical to assume that the insurer will want to find out about the current state of your health before offering you a policy.
However, whether or not you need a medical examination will depend on your individual circumstances and how much cover you need - often no examination will be required.
When you might need a medical
When you apply for life cover, you will be asked several questions about your lifestyle and health. If you’ve never had any major medical issues, and you aren’t a smoker, then the risk of you claiming on your life insurance policy will be much lower than someone with pre-existing medical problems. As a result, you may well be offered cover without a medical, whereas if your medical history is more complicated and you do have health problems, you are likely to need one.
Whatever your medical history, most insurers will ask for permission to contact your doctor so they can get a fuller picture of your medical history before they offer you cover.
The healthier you are, the lower your premiums are likely to be, so the more steps you can take to improve your health, the better
How are premiums calculated?
Insurers will look at a whole range of factors to help them decide at what level to set your life insurance premiums.
Information you are likely to be asked for includes your age, weight, height, sex, how much alcohol you drink each week, whether or not you are a smoker, your family’s medical history, your occupation, and whether you have had any medical conditions in the past, or any which you are currently being treated for.
How to reduce the cost of cover
The healthier you are, the lower your premiums are likely to be, so the more steps you can take to improve your health, the better. For example, if you are a smoker, you should try to stop as soon as possible. Similarly, if you consume more than the recommended number of units of alcohol each week, you should try and cut down your alcohol intake.
Losing weight will also have an impact, as statistically you are likely to live longer if you aren’t overweight, so there is less risk for insurers that they will have to pay out.
The importance of giving the correct information
It’s vital to be honest when giving answers to insurance companies, as if you aren’t truthful and then need to make a claim, your policy could be invalidated.
Even though it might be tempting, for example, to tell insurers that you stopped smoking years ago, if you die and it is revealed you are a smoker, any claim will be refused. The same goes for any pre-existing medical conditions – if you keep them under wraps but ultimately they are a contributing factor towards your death, your policy won’t pay out.
The impact this could have on your loved ones is likely to be devastating, especially if they thought they would be financially protected in the event of your death.
What else you should know
When you take out life insurance, you should consider writing your policy in trust, so that you don’t have to pay inheritance tax on any payout. Inheritance tax is payable at 40% on anything you leave over £325,000 when you die. So, if any life insurance payout pushes your estate above this threshold, inheritance tax will be payable, unless the policy has been written in trust.
This simply means that any payment on death will then be outside of your estate for inheritance tax purposes.
It’s a good idea to seek professional legal and tax advice before setting up a trust, so that you can be suit you have the right arrangement in place to suit your individual requirements.