Evidence of Insurability
Proof of acceptable health and risk provided through application, medical exams, or records, required for individual coverage, conversions above guaranteed amounts, and some group late enrollees.
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Practice This Concept
A group health plan automatically enrolls every full-time employee and requires no evidence of insurability. Compared with voluntary individual enrollment, this structure tends to reduce adverse selection because:
Healthy employees are brought into the pool along with unhealthy ones, balancing the group's overall risk — Adverse selection concentrates when only high-risk people choose coverage. Automatic, broad enrollment forces healthy and unhealthy employees into the same pool, so the group's risk mix approximates the general population rather than being skewed toward the sick. This risk-distribution effect is why group insurance with mandatory participation is less vulnerable to anti-selection than individually purchased coverage, and why insurers and employers favor wide participation.
National insurance concept
A key feature of convertible term insurance is that it allows the insured to:
Convert to a permanent policy without providing new evidence of insurability during the conversion period — Convertible term insurance grants the insured the right to convert the term coverage to a permanent policy (such as whole life) during a specified conversion period or up to a specified age, without submitting new evidence of insurability. This means the insured can lock in permanent protection even if health has deteriorated, because the insurer cannot require a new medical exam or reject the conversion. The premium for the new permanent policy is based on the insured's attained age at conversion. This convertibility feature makes term coverage valuable as temporary protection with a future permanent option.
National insurance concept
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