Answer: The companies that offer AL policies realize that the flexibility to increase the face amount is not that significant if increases require evidence of insurability
. Consequently, most companies offering AL policies issue them with guaranteed purchase or insurability riders.
By considering the results of adverse exercise behavior depending on an insured person's health status, we derive policy implications and analyze whether a requirement of charges or evidence of insurability
would be advisable.
(35) Coverage may not be conditioned upon evidence of insurability
Conversion occurs under a group policy when an insured individual applies for an individual policy without evidence of insurability
within a stipulated period of time before the group insurance coverage terminates.
Increases in the face amount usually require evidence of insurability
. Also, an increase in premiums requiring an increase in the face amount to stay within the definition of life insurance guidelines of Code section 7702 usually will require evidence of insurability
* Restrictions for grandfathering of existing plans without evidence of insurability
? As the market matures this will become a greater challenge for carriers and could affect risk appetite.
The rider also typically can be converted to a cash value plan later, without evidence of insurability
The underwriting insurance company is unhappy with the risk spread and may want to decline to issue the case, raise the rates, lower the commissions, ask for evidence of insurability
, or all of the above.
The new permanent policy is priced for the client's "attained" (current) age, but the insured doesn't have to submit new evidence of insurability
In addition, a good term policy with convertibility allows clients to obtain a more permanent policy without providing further evidence of insurability
Similarly, an elective increase in the death benefit (requiring evidence of insurability
) of a universal life policy that was acquired before June 21, 1988 would also subject the policy to testing.