The life insurance industry has seen tremendous growth over the last few decades. This has been in part due to advances in the industry when it comes to determining risk management strategies. The life insurance companies utilize mortality tables calculated by an expert known as actuaries.
Mortality tables are tables based on statistics that show the annual mortality rates of different people are different ages. Actuaries, on the other hand, are professionals often in the field of business whose primary role is the calculation, measurement, and management of risk.
Life insurance companies’ take on a lot of risks as there is no guaranteed way to know when someone will pass away. This is particularly important to them as their entire business model is dependent on it. As such, they try and reduce this risk as much as possible by issuing tests. These tests determine how much premium one is expected to pay to the insurance companies.
Medical Tests in Life Insurance
Some standard medical tests taken involve a physical examination, urine test, an electrocardiogram test, and arguably most important a blood test. The outcome of a blood test can be vastly instrumental for insurance companies in determining the risk of death for some; this helps them mitigate their risks.
With the advancement in the field of hematology, blood has increasingly been an indispensable instrument for the insurance companies to determine the overall health of their clients.
With the rapid growth of the service industry, more and more people are leaving the agrarian and manufacturing industries, to take on jobs in the service industry. Often these service-based jobs are not as physically demanding as their counterparts.
Physical activity is usually a good indicator of higher mortality as it can act as a deterrent from lifestyle diseases such as diabetes and heart disease. The level of physical activity one is involved in can be seen in the blood tests taken, helping the insurance companies make in their decision making.
As the service industry has grown, so has the food industry. Large restaurant franchises have crept up, growing in scale and income as the years go on. Their growth has been fueled by the kind of food they serve, which is often either rich in sugar, salt, or fat.
This kind of food, when taken in excess, can be detrimental to one’s health as it can be a contributor to diseases such as diabetes and hypertension. Blood tests can be very instrumental in finding information on this and making decisions on premiums to be paid.
Diseases are a good indicator of mortality. Blood tests are commonplace in the medical world, and they are used to find out what is wrong with other people’s bodies. As such, they have been adopted by the life insurance companies as an indispensable tool in helping them capture data for making decisions.
Blood tests can be used to find out whether the clients have terminal illnesses that can lead to their mortality. People with these diseases often have to pay higher premiums.
Disease like AIDS can be detected using blood tests. HIV lowers the patient’s immunity making them likely to be attacked by other opportunistic infections bringing the mortality chances even higher.
This case would likely be factored in the mortality tables created by the actuaries. It would indicate their mortality chances to be higher, which makes it necessary for the insurance companies to charge higher on their premiums to remain profitable.
Illnesses such as cancer can also be detected using blood tests. Cancer levels globally are on the rise; as such, it can be ignored by insurance companies and has to be updated in the mortality tables.
Cancers can be tested in blood tests, common diseases such as cervical, breast, and ovarian cancer in women and prostate cancer in men are tested for. If found, this can affect the premiums to be paid, this being the case, especially in people who are older as the chances of cancer are higher in older people.
Additional lifestyle conditions
Other diseases such as diabetes and hypertension can also be tested for blood work. These diseases lower the mortality rate in persons suffering from them. This information is accounted for when the insurance company actuaries create the mortality tables.
If the clients are found to have these illnesses, this will negatively impact their premiums. The insurance companies will then charge them higher premiums so they can remain profitable.
Kidney disease can be a fatal illness. It can be tested through blood tests; the kidneys are responsible for removing toxins from the blood. In the case where the blood tested has a lot of toxins, it is usually an indicator of kidney disease. This will factor in the costs of premiums for the client.
Drugs affect the physiological and physical aspects of the body. Drug use is mostly associated with adverse effects on one’s health. There are multiple classifications of drugs, some being prescription and over the counter drugs and narcotics. There are others like tobacco and alcohol, which are used for recreation. These drugs can be tested for in blood tests and affect insurance premiums.
Alcohol is one of the most common drugs used in the world. It is a depressant drug; this is a drug that lowers or inhibits the functioning of the central nervous system. Mortality rates in people who abuse alcohol are generally higher than the general population.
Alcohol abuse causes liver damage. It is also associated with a higher likelihood of cancer. It is also linked to increased incidents of accidents based on deaths, including road accidents. Alcohol abuse can be tested for in blood and will negatively affect the premiums to be paid.
Tobacco has been linked to causing multiple types of cancers, including lung, mouth, throat, and tongue cancer. As such, insurance companies typically charge tobacco users higher premiums for their life insurance coverage. This is because tobacco use negatively affects their mortality rate. Insurance companies can detect nicotine in blood tests confirming the use of tobacco.
Other drugs such as cocaine, methamphetamines, and opiates such as heroin, oxycodone, and fentanyl – These drugs are either illegal or highly regulated in most countries. These drugs can be tested for by insurance companies in blood tests.
These drugs drastically raise the mortality rate of their users. This could be through overdose as the abusers use more medications than their bodies can handle. The users are also likely to be involved in violent crimes as the drugs are illegal to make and distribute. Users are expected to pay higher premiums for their health insurance.
The life insurance industry has existed since the 1700s; as such, it can be classified as a mature industry. With increased competition, insurance companies have to think outside the box and implement risk management strategies. In regards to risk management strategies, very few are as effective as the use of blood tests in insurance.