The Relationship Between Life Insurance and Medical Science By Allison Ryan At Isnare.com Ezine Articles

Modern life insurance requires the services of many types of experts: investment analysts, actuaries, physicians, lawyers, and many other technically trained people. The physician is essential because his judgment and skill are necessary to determine the insurability of applicants for insurance.

The actual procedure of accepting life insurance risks, usually referred to as "underwriting" involves, however, not only the services of a medical director but also an underwriting executive who in cooperation with the actuary, the medical director, and the statistician determines the rules for the proper classification of risks.

Policyholders are expected to pay a premium commensurate with the class of risks to which they belong. The importance of the physician in the selection of risks for a given insurance policy was appreciated even in the earliest days of term life insurance.

In England, where life insurance on the level premium plan began in the latter part of the 18th century, the applicant for a policy was required to appear personally before the officers of the company, who plied him with questions regarding his health, character, and financial resources.

Usually this group of officers included at least one physician, upon whom the others depended to elicit and evaluate the details of the applicant's medical history and to note any outward signs of ill-health. The early applicant for insurance was not given a medical examination in the modern sense. It was not until well along in the 19th century that such examinations became part of the application process.

Thus, while the medical aspect of selection was by no means neglected at the beginning, methods of detecting early signs of chronic disease were lacking and there was little knowledge of the effect of many medical impairments on longevity. Consequently more attention was then paid to the personal character and integrity of the applicant.

If he did not live in the city where the insurance office was located and could not conveniently appear for questioning, he was required to pay an extra insurance premium. The first American best life insurance companies followed the medical and insurance practices of the English companies.

Thus, a history of the New England Mutual Life Insurance Company, one of the first American companies, notes that at the beginning more reliance was placed upon the judgment and personal recommendation of the agent than upon the findings of the physician.

The Mutual Life Insurance Company of New York, which was launched in 1843, did not require a medical examination until 1856. Both companies, however, required rather full statements from the applicant as to his previous medical history and his physical condition at the time of application.

These companies, and the many others then being formed, often required also a certificate of health from the applicant’s personal physician, and this custom persisted for many years even after insurance medical examinations were inaugurated.

Some of the physicians associated with these early insurance companies were very prominent men. For example, Dr. Willard Parker, one of the great figures in American medicine 75 years ago, served as physician for the Equitable Life Assurance Society.

When the Metropolitan was founded in 1868, life insurance medicine was still in a formative stage. In the company’s early days there was no separate medical department for insurance policies, even for the most affordable life insurance for substandard insurance policies.

In the bylaws of the company provision was made for the medical oversight of the selection of risks. It was "the duty of the consulting and examining physician to attend daily, at stated hours, at the office of the company to examine applicants for assurance at the office or elsewhere when requested by an officer of the company, and to make in each case a report thereof to the officers of the company; to give advice and counsel on all applications from abroad, and also, when requested, on all proofs and papers in support of claims, occasioned by the death of the insured."

Dr. J. A. White, a Brooklyn physician, first held the official title of Medical Examiner for the Company and, as was the custom, his address and office hours were listed in the early publications for the Agency Force.

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