You mean those same insurance companies that can deny a pay out when they discover a pre existing condition in a clients confidential medical file? I don't trust them, they must have a means of getting info. Heck what if they just ask you for your tax receipt prior to paying out?
Ziggy, don't confuse insurance companies that insure health risks and provide policies such as life insurance, disability income protection, and critical illness insurance-people know them as life insurance companies with Property Casualty(P/C) insurance companies
Here is some basic information that may help explain things.
P/C companies insure your house, car , boat, etc.
When a person enters into a contract to buy insurance they provide specific information to the insurer to assess the risk they are insuring. For example, the known value of your house is calculated, how far it is from a hydrant, a fire department, etc. They may ask for a boat survey every 5 years.
On the Life insurance company side of things if you buy a policy personally (life, accident, or critical illness) you will be required to provide proof of health, and depending on the answers to the application questions, your age, the amount of insurance, you may have to have a nurse come and ask the same questions again, see an insurance company approved doctor for a full medical, or they may just accept the questions on your application , and write your doctor.
As we all know from insuring our boats prices and policy wording varies depending on the type pf policy and the company
Every one of these applications has a disclosure form that an applicant signs and one of the things that and applicant agrees to is to share and give access to the insurance company to a centralized organization that keeps track of insurance applicants . This is the Medical information Bureau or MIB
Pre-existing condition clauses are a whole different thing.
Let me give you an example
A company, provides group insurance to it's employees. Instead of having everyone do an insurance medical, when people enroll they are given insurance coverage up to a certain limit on application. For higher amounts above a set limit employees have to provide a completed medical report. The insurer in these cases will either approve the additional coverage or not.
For example a small company's benefits plan might be offer disability insurance up to $5,000 /month but medical proof is required for application over $2,000/month.
This is different than if you are buying insurance privately when they will individually underwrite people. and add a rating or an extra charge if for example a person is the perfect weight for someone 6'8" but they are 5' 6" Have a underlying illness etc.
Pre-existing condition clauses are how group insurers can underwrite everybody in a company . If a person makes a disability claim for example because they already had a medical condition that occurred in a time period before the person joined the plan (say 244 months) then if they made a claim for the same illness in the first 24 months after they applied they claim might be declined (the policy terms explain this)
When a person applies to make a claim critical illness , disability, the applicant as part of the claims submission process signs a release allowing the insurance company to contact the claimants doctor(s) obtain all medical records etc.
There is also a claims appeal process where if a claim is denied or stopped at some point a claimant has the right to appeal that decision.
It is very unfortunate when denied claims are not appealed. I have seen denied claims reversed on appeal.
