More on Life Insurance
More on Life Insurance
Learn how life insurance companies protect against fraud and keep your rates low.
When you apply for life insurance, you go through the underwriting process. This is when the insurer determines how risky you are to insure based on things like your current health, your health history, your driving record and more.
One of their resources? The Medical Information Bureau.
The Medical Information Bureau, or MIB, checks past records to uncover "errors, omissions or misrepresentations made on insurance applications." It’s similar to a credit report for the life insurance process, and it helps prevent fraud, risk, and increased costs.
The MIB was founded in 1902 with the goal of working with life insurance companies to combat fraud. They do this by compiling information from previous life, health, disability, or long-term care insurance applications (you have to have applied previously; the MIB doesn’t just have files on everyone).
For those who are concerned about privacy, there’s no need for alarm: instead of keeping actual medical records on file, the MIB information is coded in a way that "represent medical and avocational information that is significant to the underwriting process" and there are no personal identifiers that could be used in identity theft. The MIB codes used are the same as International Statistical Classification of Diseases and Related Health Problems 10th Revision (ICD-10) codes used in the broader medical industry, although the MIB only uses a fraction of these codes.
Your information isn’t submitted to the underwriter without your permission, and everything falls under HIPAA regulations.
Underwriters use the MIB to verify information so that when they’re setting your premium rates, no important information is missing and they’re sure that what you’ve disclosed on your current application is consistent with previous applications.
It’s important to note that MIB information is just one part of the larger picture that an underwriter puts together. They don’t make any decisions based solely on the MIB report; instead, they use it to develop and verify your medical history so their final assessment is as accurate as possible.
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An MIB report covers your life insurance applications over the previous six months or so. It also compiles health information that you either left out of your application or wasn’t made apparent to the underwriter via other means (like the medical exam).
The type of information that comes through an MIB report request includes:
The date of any previous life insurance applications
When it was diagnosed and/or treated
Types of treatment
Where the medical history came from
For example, let’s say you’re an applicant who had prostate cancer and underwent surgery. If you applied for life insurance previously, that would have been uncovered by the underwriter by looking at your medical history, and that would go into your MIB report.
Now you’re applying for life insurance again. The current underwriter would learn from the coded MIB records that the surgery occurred, when it happened, and how that information was obtained (say, from an Attending Physician Statement).
The underwriter can then use that in conjunction with other information – the medical exam, additional physician statements, a prescription check – to make sure that everything matches up and the current application isn’t missing any pertinent pieces of your health history.
Life insurers and underwriters determine how much your insurance premiums will cost based on how risky you are – how likely you are to die during the course of your coverage. That’s why they pull things like motor vehicle reports and health histories from your doctor; they want to see what your health has looked like and if you engage in any risky hobbies.
While you should be as honest as possible during your application about, say, failing a drug test, not everyone will be. Unscrupulous types might "accidentally" leave off that failed drug test, knowing that it could harm their ability to get lower rates. With the MIB, this hidden knowledge won’t harm the insurance company and helps keep rates low for customers.
Of course, applying for life insurance previously isn’t necessarily a bad thing; maybe you decided after applying that it wasn’t in your budget, or you decided to go with a different carrier. And in fact, MIB records don’t even show if you were declined last time. But the current insurer needs to know about what was uncovered during previous applications just in case any pertinent information was left off of your current application.
By doing this, the insurer helps combat fraud. They won’t give lower rates to someone whose history showed that they should have been paying more for their policy. Properly rating someone helps keep costs in check – which is good for the insurers and good for their customers.
Wondering what’s on your MIB report? If you’ve previously bought or applied for insurance, you can request your own copy here so you can take a look and not be surprised by anything the next time you apply.
When you order a copy of your MIB Consumer File, it may include:
Medical and personal information requested, along with which insurance company requested it, and when.
The name of any insurance company that made an inquiry or received a copy of your file.
Information in the MIB’s Disability Insurance Record System (“DIRS”) for anyone who has applied for disability income insurance.
Because the MIB falls under the federal Fair Credit Reporting Act (FCRA), users have all of the same rights available under the FCRA, including free copies of their MIB Consumer File.
FCRA protections also allow you to dispute your file if you feel anything is misrepresented. You can request a free “reinvestigation” from the MIB noting anything that you think is inaccurate or incomplete. This can take up to 45 days to complete.
Note that while life insurance brokers like Policygenius don’t have access to your MIB file, we can advocate for you and work with multiple insurance companies to make sure you get the best rates possible when you apply for life insurance.
Colin Lalley is the Associate Director of SEO Content at Policygenius in New York City. His writing on insurance and personal finance has appeared on Betterment, Inc, Credit Sesame, and the Council for Disability Awareness.