The Physician and the Life Insurance Policy

October 2025 | Vol. 69, No. 3
Written by Merrill Jay Mirman, BSc (Pharm.), DO, CPIA

No, this is not the name of a new TV melodrama.

It is, however, a part of the life of every physician. How so, you say? Well, let's begin with what Life Insurance is.

Life insurance is a contract between the Insured (usually you) and the insurer (usually an insurance company). The contract stipulates that upon the death of the Insured, the Insurer will pay a sum of money to a party named in the contract, known as the Beneficiary. In passing, this type of contract is called a "third party" contract (the Beneficiary is the third party).

The reality is that the insurance company, which issues the contract (the life insurance policy), is making a bet. The bet is simple: they bet that with the premiums which the insured pays, together with the income from investments the insurance company makes, minus expenses, that the company will make a profit. It's gambling.

There are things which an insurance company utilizes to calculate a premium which it will charge a client for providing the client with life insurance.

Some of the factors utilized by actuaries working for the insurance company are easy to contemplate, e.g., age of the applicant for insurance versus expected longevity (there are tables for this); sex (women outlive men [no snide comments]); disability, illness, family history, and physical status of the applicant [e.g. height/weight]; personal behavior of the applicant [alcohol consumption, smoker (especially tobacco} - premiums for tobacco smokers can be 5 times that of the nonsmoker]; and medical status and history of the applicant, e.g. pulse, blood pressure, breathing disorders, and cancer. Remember, every part of the medical history of the applicant is fair game in determining the rating of the applicant and the impact on the premium charged for the life insurance. Don't forget: mental status and history.

How about peripheral factors which influence the cost of the premium for life insurance? Some other factors which are evaluated by the insurance company are: What is the occupation of the applicant (is it risky? If so, how much?); does the applicant have a pastime which is considered hazardous (e.g., Sky diving); does the applicant have a poor driving record and/or arrests; is the applicant financially insecure/unstable; etc.

Does the physician play a role in all of this? You betcha! A role that is crucial to the applicant for insurance (your patient) obtaining the needed coverage at the best price from the insurer, and in the best interest of the applicant as a patient. And yes, there really is "Guaranteed Issue Life Insurance." It costs more, and usually comes with a lower level of coverage.

The usual examination of an applicant begins with a telephone interview and, if necessary, is followed by an interview in person (a review of Rx and OTC medications, history of medical events), and a physical examination, which may include a collection of blood and urine. Drug screening may be requested. The examinations vary somewhat with the type of life Insurance requested, the level of coverage requested, and the insurance company. Notably, besides a physician, a qualified non-physician may perform the examination.

Some sources of information used by the Insurer: the applicant; the physician who has been involved with the applicant; the MIB (previously known as the Medical Information Bureau); the prescription database; motor vehicle reports; credit reports; and the medical examination required by the Insurer.

This brings us to Insurance Classifications. They are in ascending order of cost: Preferred Plus, Preferred, Standard Plus, Standard, Table Ratings, and Smoker/Tobacco Ratings. This list is typical in general; a particular Insurer may have other Classifications.

It should be obvious, at this point, that the documented relationship of the physician and his patient goes beyond the office of the physician. The physician is well served who asks the questions, performs the examinations, records the interaction with the patient, and takes the indicated actions and follow-up. Everything the physician does influences the application for life insurance of his patient.

As you can see, the physician is intimately involved in the life Insurance application of his patient, as well as the health of his patient.

About the Author: Certified by the American Osteopathic Board of General Practice, Certified Professional Insurance Agent, Certified Annuity Specialist, Financial Para-planner Qualified Professional ©

To contact the author: [email protected]