I’d like to clear up some of the misinformation floating around about the MIB (short for Medical Information Bureau). This article will explain why the MIB is good for everyone involved in a life insurance transaction.
First lets get our information straight because many consumers have the wrong idea about these guys.
The MIB is an “information exchange” that collects pieces of information significant to your health that is reported by member companies (other life and health insurance companies). This information was collected by prior applications for insurance and underwriting investigations.
If there’s some data regarding your health in the MIB, then you had previously signed a form authorizing the MIB to hold that information.
Only people who have applied for insurance within the past 7 years have an MIB file.
Lets also be clear that “traditional” life insurance companies are not making decisions based on your MIB report. So if you’re taking a medical exam for life insurance, underwriters will be reviewing your medical exam AND your medical records as that’s more detailed and recent information.
How do life insurance companies use the MIB?
Life insurance companies contribute information of underwriting significance to the MIB in the form of MIB’s proprietary and highly confidential medical and avocation “codes”. These codes do NOT indicate what action the life insurance company took with respect to your application (ie. approved, declined, rated etc) or the amount of insurance applied for.
This is important to understand because the MIB uses these proprietary codes and NOT the actual details of a person’s medical condition. The codes are mostly used as “red flags” that alert life insurance companies to the fact that information was obtained on a previous insurance application regarding a health impairment or avocation risk.
These codes DO NOT provide enough detail for a life insurance underwriter to make a decision. In fact, life insurance underwriters are prohibited (under MIB General Rules) from making underwriting decisions on the sole basis of a reported code. Life insurance companies are required to conduct further investigation to obtain more information about the reported codes.
Typically, there are no codes reported for “clean cases” or those who qualify for preferred or standard rates. Also, the MIB only holds these codes for 7 years as mentioned earlier.
So what value does the MIB bring to YOU (the consumer) buying life insurance?
1. They reduce the risk associated with application errors, omissions and representations which brings down the cost of life insurance.
2. They reduce the possibility of misclassification of an applicants health. This is very helpful for the financial soundness of life insurance companies and for you (the consumer) because it keeps rates lower.
3. Because of the fraud prevention, there’s cost savings to consumers as well.
What does the MIB do with my information?
The MIB shares your consumer report file only with “member” life and health insurance companies (which you authorize on your application). The MIB does NOT share or sell any individually identifiable information to any “non-Member” third-parties.
Could my MIB report by incorrect?
Humans make errors. The MIB, like any other agency is bound to make some errors. What happens if you have something on your MIB report that you believe is untrue?
– Request your FREE MIB report.
– If there is something false on the report, file a dispute.
Simple as that.
Bottom Line. The MIB is good for all parties involved. Life insurance companies and consumers benefit from their service.
If you’re curious about what’s on your MIB report, you can request a free copy of your MIB report here.