What is Evidence of Insurability?
Evidence of insurability (EOI) is essentially proof of good or decent health. Most insurance providers will make you go through an EOI process to check that you’re not likely to pass away in the very near future and to confirm that your death benefit isn’t excessive. You can get life insurance without EOI, but you’ll generally pay more for it and be subject to a two-year waiting period.
The evidence of insurability process
You might have to go through an EOI process to get life or health insurance. But while health insurance solely focuses on your physical wellness, life insurance expands the process a bit to look at both your health and your finances.
After you apply for life insurance, the underwriting process starts. A portion of that comes down to the insurance provider verifying your evidence of insurability. The exact steps of this process vary from insurer to insurer, but it’s basically their way of making sure that the life insurance policy you’re asking for makes sense.
To determine that, they generally look at two things:
Your health. You’ll most likely have to fill out a medical questionnaire and may need to get a medical exam. This checks you for a wide variety of health conditions that could make you more likely to die prematurely.
This portion of the EOI process usually evaluates your personal and family health history to look for any red flags, along with factors like your current medications and your penchant for undertaking high-risk behaviors like smoking cigarettes or skydiving. The life insurance provider uses this overall health check to estimate how long you will live so they can set your premiums accordingly.
Your financial situation. Life insurance is supposed to help the people you leave behind adjust to life without you, not get them rich overnight. To ensure your policy delivers the former and not the latter, the life insurance company evaluates things like your assets and your income (or your partner’s income, if you’re a stay-at-home individual) to determine a reasonable policy benefit for you.
Based on what they turn up during the EOI process, the life insurance company decides whether or not to insure you and, if so, the size of the policy you can buy.
Getting life insurance without EOI
Some life insurance policies, like no-medical exam life insurance or guaranteed-issue life insurance, skip the EOI process. That means that you won’t need to go in for a medical exam, which can make it possible to get a policy if you have a health condition that affects your projected lifespan.
Specifically, there are a few different types of no-exam options available today:
Accelerated underwriting life insurance. These policies streamline the underwriting process for healthy individuals, using the information you submit and other data the life insurer collects but skipping the medical exam. These policies usually cost about the same as medically underwritten ones, but they may come with a death benefit cap lower than other life insurance policies.
Guaranteed issue life insurance. These policies are restricted only by age. If you fit into the required age bracket, you’re guaranteed to be offered coverage by the insurer (hence the name). But guaranteed life insurance usually comes with a limited death benefit and an extensive waiting period (e.g., two years) before the coverage goes into effect.
Simplified issue life insurance. Another policy type with streamlined underwriting, these policies may be a good option if you’re not living with a chronic condition but not necessarily healthy, either. Simplified issue policies generally cost more than other types of life insurance for the same policy benefit and are capped with regards to the max death benefit available, as well.
Clearly, there are some tradeoffs without evidence of insurability. Skipping the EOI process can help you find a policy if you’ve been denied coverage when applying for medical exam-based life insurance. Weigh out the pros and cons, though, because a no-EOI policy might come with higher premiums and a lower death benefit than medically underwritten policies. And you may be subject to a lengthy waiting period before your coverage kicks in.