What is Evidence of Insurability?
Evidence of Insurability (EOI) is a process required by insurance companies to assess an individual’s health and medical history before granting coverage, particularly in cases of life insurance. This evidence may include medical exams, health questionnaires, and sometimes even medical records. Insurance companies use this information to determine the level of risk associated with insuring the applicant, which can affect premiums, coverage limits, and even eligibility.
For life insurance policies like Term Life Insurance or Whole Life Insurance, EOI is commonly required for those seeking higher coverage amounts or who have pre-existing health conditions. In the context of Indexed Universal Life Insurance and Senior Life Insurance, it can be a crucial step in qualifying for coverage at affordable rates. Some group life insurance policies provided by employers also require employees to provide EOI if they opt for additional coverage beyond the basic offerings.
By requiring EOI, insurers aim to ensure that the premiums they charge reflect the risk of insuring individuals. For example, if someone applies for a policy with a history of chronic illness, the insurer may raise their premiums to offset the increased risk. In contrast, someone with a clean bill of health may secure more favorable terms. This process helps maintain balance and fairness within the insurance system, benefiting both insurers and policyholders.