What is the role of a medical exam in life insurance underwriting?

The role of a medical exam in life insurance underwriting is to assess the health status of the applicant, which is crucial for determining the risk associated with issuing a policy and establishing appropriate premium rates. Insurers use the results of the medical exam to evaluate potential health issues that could affect life expectancy and overall risk for the insurer. This information allows the insurer to set premiums that are reflective of the applicant’s health profile, ensuring that the policy is priced appropriately based on the level of risk involved. Without this assessment, insurers would not have a reliable basis for underwriting decisions, which could lead to imbalances in the pooling of risks.

Understanding the applicant's health condition through a medical exam helps ensure that the life insurance coverage is both fair for the insurer and appropriate for the insured.