How do insurers typically assess the risk of applicants?

Insurers typically assess the risk of applicants by evaluating personal health information and lifestyle factors. This involves a comprehensive analysis that may include medical history, existing health conditions, medications, and lifestyle choices such as smoking, diet, and exercise habits. By gathering this detailed information, insurers can identify potential health risks associated with the applicant, which helps them determine the appropriate premiums and coverage options.

This methodical approach allows insurers to make informed decisions based on an individual's likelihood of requiring medical care or filing claims in the future. It ensures that they can manage their risk effectively and provide policies that reflect the actual risk presented by each applicant.

In contrast, random policy issuance without assessment would not be sustainable for insurers, as it would expose them to unknown risk levels and potentially lead to significant financial losses. Solely relying on credit scores is insufficient, as it could fail to capture the comprehensive health-related factors that impact an individual's insurability. Assessing risk based only on the number of claims paid in the past does not provide a thorough understanding of the current applicant's health status and lifestyle, which are crucial for determining future risk.