Why is a medical exam required during the life insurance application process?

A medical exam is required during the life insurance application process primarily to assess the applicant's health and risk level. This assessment is crucial for the insurer to determine both eligibility for coverage and the appropriate premium rates to charge.

When an applicant undergoes a medical exam, the insurer collects important health information that may include physical exams, blood tests, and other diagnostic measures. This data helps the insurance company evaluate the applicant's current health status, any pre-existing medical conditions, lifestyle choices, and overall risk factors that could influence mortality risk.

For example, if an applicant has a history of heart disease or diabetes, this information may lead to a higher premium due to the associated increased risk of claims. Conversely, a healthy applicant may be offered a lower premium rate. By conducting a thorough health assessment, insurers can appropriately match their risk with suitable policy offerings.

This practice aligns with underwriting principles, where the goal is to maintain a balanced portfolio of insured individuals, ensuring that premiums collected will cover claims paid out while sustaining profitability.