Wednesday, December 22, 2010

What Does "APS" Stand for in Life Insurance?

During the underwriting process, many life insurance applications contain information or details about the applicant’s medical history that raise additional concerns.

While the medical questionnaire portion of life insurance applications contains comprehensive and thorough questions, there is no way to cover every possible medical malady. Applications submitted by consumers whose answers to medical questions indicate prior treatment for, or current diagnoses of, ailments relevant to life expectancy must undergo further analysis.

Requesting an Attending Physician Statement, or APS, is the most common and efficient way for underwriters to obtain factual data pertaining to an applicant’s health history.

Purpose


With a life insurance applicant’s APS, underwriters can easily evaluate the risk associated with the consumer’s negative health history. An APS allows the life insurance company to base policy premiums on accurate and verifiable medical data, eliminating the possibility of mistakes or misinterpretation.

The purpose of the APS is to take any potential guesswork out of evaluating an applicant’s treatment history and medical conditions to establish an appropriate premium for the requested coverage amount.

Contents


The information contained within an APS will differ from physician to physician, and may also depend on the specific data that originally concerned life insurance underwriters. Since an APS is not a document routinely generated as part of a patient’s normal treatment, it must be prepared from scratch when an insurance carrier’s request is received.

Underwriters often ask for only those details related to the conditions or ailments relevant to the life insurance application. The APS contains results of any tests performed, notes taken during patient visits and interviews, nurse and physician observations, physical measurements, vital statistics, diagnoses and prognoses.

Relevance


Underwriters only request an APS if an insurance application indicates that the consumer might pose a financial risk to the company that is outside established boundaries. Certain health conditions, medications, diseases, surgeries and other medical experiences indicate the possibility of a shorter lifespan.

Since the financial risk to life insurance companies is directly connected to a consumer’s life expectancy, and that person’s life expectancy is directly connected to his medical conditions, the carriers believe that an APS presents a relevant and accurate method of clarifying such risks.

Alternatives


Very few alternatives exist if applicants choose not to permit life insurance companies to obtain an APS. If underwriters determine that an APS is necessary to continue proper evaluation of an applicant’s insurability, refusing to authorize the release of such medical details will likely result in a declined application.

Some life insurance companies offer guaranteed-issue policies to consumers at significantly higher premiums, and such products require very little medical information. However, guaranteed-issue life insurance policies offer less coverage for much higher prices, and are only appropriate for consumers who would otherwise be rejected by traditional life insurance carriers.

References


WholesaleInsurance.net: Attending Physician Statement Definition
InsuranceNews.net: How Insurance Companies Benefit From Professionally Summarized Attending Physician Statements




This article is a Twisted Nonsense Exclusive! (12/22/2010)