What does insurability assess?

Insurability refers to the concept used by insurance companies to determine whether an individual qualifies for coverage, based on an assessment of risk associated with insuring that person. This assessment evaluates various factors, including medical history, lifestyle choices, and sometimes age, to establish the likelihood of a claim being made in the future.

When an individual's insurability is determined, it essentially informs the insurer whether they will accept the risk of providing coverage and under what terms. This process helps the insurer manage their risk and set premiums appropriately.

In contrast, risk perception relates to how an individual views the likelihood of different risks occurring, financial status assesses a person's economic standing and ability to pay premiums, and investment potential pertains to the ability to generate future financial returns. While these factors may influence certain aspects of the insurance process, they do not directly address the core definition of insurability. Therefore, assessing insurability focuses specifically on an individual's eligibility for insurance coverage based on the risks ascribed to them.