Life & Health Insurance Exam (National Portion)Underwriting and Policy IssueHard
During the underwriting process for a large life insurance policy, the insurer requires the applicant to undergo a medical examination. Which of the following statements regarding the cost of this medical examination is generally true?
- AThe agent typically covers the cost of the medical examination as part of their service.
- BThe insurer typically pays for the medical examination.
- CThe cost is split evenly between the applicant and the insurer.
- DThe applicant is always responsible for paying the cost of the medical examination.
Show answer & explanationAnswer & explanation
Correct answer: B. The insurer typically pays for the medical examination.
In most cases, when an insurer requires a medical examination as part of the underwriting process, the insurer pays for the cost of that examination. This is considered a cost of doing business and gathering necessary risk assessment information.
Why the other options are wrong
- A. Agents are compensated by commission and do not typically pay for underwriting costs.
- C. Cost-sharing is not the standard practice for mandatory medical exams in underwriting.
- D. While some specialized exams might be an exception, standard medical exams required by the insurer are usually paid by the insurer.
Underwriting Medical Exam Cost
When an insurer requires a medical examination for underwriting, the cost of this exam is typically paid by the insurance company.
- Insurer-required exams are insurer-paid
- Part of underwriting expenses
- Not passed on to applicant in most cases
Memory trick: Underwriting's Medical Bill? The Insurer Pays the 'I'nvestigation.