What Is Evidence of Insurability for Life Insurance?

Evidence of Insurability (EOI) is a process used by life insurance companies to assess an applicant’s health and determine their risk level for coverage. It is a standard part of the underwriting process for many life insurance applications. Through EOI, insurers gather comprehensive health information and other relevant details to make informed decisions about offering coverage and setting appropriate premiums.

When Evidence of Insurability is Needed

Evidence of Insurability is required in several specific situations. When applying for a new individual life insurance policy, applicants undergo EOI to allow the insurer to evaluate their risk profile comprehensively. This detailed assessment helps determine eligibility and pricing for the requested coverage.

EOI is also needed when an individual seeks to increase the coverage amount on an existing life insurance policy. A request for higher benefits often triggers a new EOI review to reassess the increased financial risk. For group life insurance plans offered through employers, EOI is frequently necessary when an employee enrolls outside of the initial open enrollment period, such as when applying late or after declining initial coverage.

In group life insurance, employers often provide a base amount of “guaranteed issue” coverage, which does not require EOI. However, if an employee wishes to elect coverage amounts exceeding this guaranteed issue limit, they must submit Evidence of Insurability. This allows the insurer to underwrite the additional coverage beyond the standard offering.

Components of Evidence of Insurability

The Evidence of Insurability process involves collecting various types of information and documentation to provide a comprehensive view of an applicant’s risk. Key components include:
A detailed health questionnaire, which asks about an individual’s medical history, current health conditions, medications, and lifestyle habits such as tobacco or alcohol use. This questionnaire helps insurers understand past illnesses, surgeries, and ongoing treatments.
A medical exam, often performed by a paramedical professional at a convenient location for the applicant. This exam usually includes measurements of height and weight, blood pressure, and pulse, along with the collection of blood and urine samples. These samples are analyzed for various health markers, including cholesterol levels, blood sugar, and evidence of nicotine or drug use, providing objective data about the applicant’s current health status.
An Attending Physician Statement (APS), which is a report directly from the applicant’s doctor(s) detailing their medical history, diagnoses, treatments, and prognosis. This document offers insights into the applicant’s health beyond self-reported information and medical exam results.
A Medical Information Bureau (MIB) report, a database used by life insurance companies to detect inconsistencies in applications and prevent fraud. The MIB report contains coded information about previous life insurance applications and reported health conditions, helping insurers verify information provided by the applicant.
Review of an applicant’s prescription drug history, allowing insurers to see current and past medications, which can indicate underlying health conditions.
A Motor Vehicle Report (MVR) may be obtained to review driving records, as a history of reckless driving can indicate a higher risk profile.
For very large policy amounts, insurers might request financial information, such as income and assets, to ensure there is an insurable interest and that the requested coverage aligns with the applicant’s financial situation. This financial underwriting helps confirm the policy’s purpose is not speculative.

The Evidence of Insurability Process

Once it is determined that Evidence of Insurability is necessary, the process begins with the formal request from the insurer or employer. The applicant is typically notified of the EOI requirement and provided with the necessary forms and instructions. This initial step sets in motion the collection of detailed health and financial information.

A significant action for the applicant is scheduling the paramedical exam, if one is required. This exam is usually conducted by a third-party medical professional at a convenient location for the applicant. During this appointment, the health questionnaire is often reviewed and completed, and the physical measurements and sample collections take place.

Applicants must complete the health questionnaire accurately, providing truthful and comprehensive details about their medical history and lifestyle. A crucial step involves signing authorizations that permit the insurer to obtain medical records from healthcare providers and other third-party reports like the MIB or Motor Vehicle Report. Without these signed authorizations, the insurer cannot proceed with gathering all necessary underwriting information.

After all required information, including the exam results, questionnaires, and third-party reports, has been gathered, it is submitted to the insurance company’s underwriting department. Underwriters, who are trained professionals, then review all the collected evidence to assess the overall risk presented by the applicant. This comprehensive review allows them to determine eligibility for coverage and establish appropriate premium rates.

Outcomes of Evidence of Insurability Review

The review of Evidence of Insurability by the insurance company’s underwriters leads to one of several possible outcomes.

The most favorable outcome is an approval, where the coverage is granted exactly as applied for, indicating the applicant meets the insurer’s standard risk criteria. The policy will be issued with the requested coverage amount and at the standard premium rates.

An alternative outcome is approval with a modified offer, which means coverage is granted but with different terms than initially requested. This modification often involves higher premiums due to an increased risk profile identified during the EOI review, or a reduced coverage amount.

The least favorable outcome is a denial of coverage, where the insurer determines that the applicant’s risk is too high to provide coverage. This decision is based on the comprehensive assessment of all collected evidence. If an applicant receives a modified offer or a denial, they can accept the revised terms, explore other insurance options, or appeal the decision by providing additional information.