The Government loves fancy names for bills, forms, and agencies.  IRS, CIA, SPAWARP (the last is made up but probably exists...my apologies to SPAWARP).  As you're going through your term life insurance application, you will come across a HIPAA authorization form.  Let's look a little closer at a newer addition to the term life app and how it applies to you.

HIPAA is a huge set of rules and regulations that deal with privacy, health information, and portability of insurance among others.  It stands for Health Insurance Portability and Accountability Act (HIPAA) and took effect in 2003.  It's a massive set of rules that follows ERISA, an equally massive sent of rules.  Some of the HIPAA guidelines make sense such as removing social security numbers from ID cards.  Anyone who has had a purse or wallet stolen can understand this move.  Others are less obvious in their aims or better yet, results but we take the good with the bad.  How does HIPAA come into play when applying for life insurance (or health insurance for that matter)?

The main parameter that falls under HIPAA in our context deals with private health information.  When you apply for life insurance, you must provide health information and history to the life insurance company as part of the life underwriting process.  HIPAA governs what the company can do with this information and what the company cannot do.  HIPAA really comes into play for the average American when your private health information is going from one entity (say a doctor) to another (life insurance company, etc)  This is why you need to complete the HIPAA authorization when you sign up with a new doctor.  You'll notice it's one of the forms needed.  You may also receive updates of their HIPAA guidelines from time to time.

Specifically, the HIPAA authorization in a standard term life insurance application allows the the insurance company to request medical information from your doctor or medical providers.  It gives your approval for your physicians to release your medical records in the allowed means described on the HIPAA authorization to the life insurance company.  The company will then use this information to determine term life eligibility and the offered health class (which directly ties into the life insurance rate to be offered).  There's usually a time constraint on the information (i.e. 30 days) which means that they can't indefinitely have access to your information.  You can also revoke the authorization at any time.  The carrier may have an option not to allow the revocation if your policy is being contested (due to perceived fraud or misrepresentation, etc).  The form also has to specifically say who will receive the information and for what use.

What if you don't want to sign the authorization?  Most carrier (if not all) will not proceed without the completed HIPAA authorization.  This essentially means it's impossible to apply for life insurance without the completed form.  The life companies essentially feel they are unable to make a decision with incomplete information and do not want to risk the liability of violating HIPAA privacy policies.  HIPAA was designed to protect you as the consumer so we feel confident that signing the authorization does not expose you to undue privacy concerns.  Ultimately, we need the form in order to secure term life insurance protection.