What Does Evidence of Insurability Mean?
Understand Evidence of Insurability: learn how insurers assess your health and risk to determine eligibility and set appropriate coverage terms.
Evidence of Insurability (EOI) is a formal process where insurance companies evaluate an individual’s health status and overall risk level. This assessment helps insurers determine eligibility for coverage or modifications to existing policies. It gathers necessary health and lifestyle information, ensuring the insurer has a clear understanding of the risk involved.
Understanding Evidence of Insurability
EOI represents the documentation an individual provides to an insurance company to demonstrate suitability for their coverage. This process requires applicants to submit medical and health details, allowing insurers to assess the potential risk. Insurers require EOI to determine the appropriate risk level, establish eligibility, and set accurate premium rates.
The primary purpose of EOI is to maintain fairness among policyholders. It prevents individuals from obtaining new or increased coverage when aware of a health condition that would classify them as a higher risk. By evaluating health and lifestyle factors, insurers ensure the cost of coverage is equitably distributed. This assessment helps prevent adverse selection, where individuals with known higher risks disproportionately seek coverage.
Situations Requiring Evidence of Insurability
Evidence of Insurability is typically required in several common scenarios for various types of insurance. It is most frequently encountered in applications for individual life, health, and disability insurance policies. New individual life insurance applications often require EOI to establish the applicant’s health profile.
Beyond initial applications, EOI is common when increasing existing group life insurance coverage beyond a guaranteed issue amount. Many employer-sponsored plans offer basic coverage without EOI, but supplemental coverage above this threshold usually requires it. Similarly, if an individual applies for coverage outside an initial open enrollment period, such as through late enrollment or after a qualifying life event, EOI will likely be requested.
Other instances include reinstating a lapsed policy or converting a group policy to an individual one, especially if there’s a significant gap in coverage or an increase in benefit levels. EOI ensures the insurer can re-evaluate the risk associated with the applicant’s health status at the time of the new application or change.
Types of Information for Evidence of Insurability
The EOI process involves providing various types of information and potentially undergoing specific assessments. A common component is a comprehensive health questionnaire, which gathers personal and family medical history, and lifestyle habits like tobacco or alcohol use. These questionnaires may also inquire about current medications, past hospitalizations, and ongoing treatments.
Depending on the coverage sought and applicant responses, a medical examination might be required. This can include a physical exam, blood work, urine tests, and sometimes an electrocardiogram (EKG). The results offer objective data to help insurers evaluate the applicant’s overall health.
In some cases, the insurer may request an Attending Physician’s Statement (APS), a report from the applicant’s primary care doctor or specialist providing detailed medical records. Prescription drug history checks are also common, allowing insurers to review past medication use for insights into health conditions. The specific information requested can vary based on the insurer, policy type, and coverage amount.
Outcomes of Evidence of Insurability Review
Following the submission of all required EOI information, the insurance company’s underwriting team conducts a review. This assesses the applicant’s health and risk profile based on collected data. The outcome determines the insurer’s decision regarding the requested coverage.
There are three possible outcomes: approval, conditional approval, or denial. Approval means coverage is granted as requested, usually at standard premium rates, indicating the applicant meets health criteria. Conditional approval means coverage is granted with specific terms, such as higher premiums due to increased risk factors or exclusions for certain pre-existing conditions.
A denial means insurance coverage is not granted because the applicant’s health profile presents an unacceptable risk. The insurer typically informs the applicant of the medical reasons for denial. The review process can take a few days to several weeks, depending on information complexity and if additional records are needed.