Short answer
The insurer reviews your health history, medical records, prescriptions, billing codes and family history, then either covers you for everything, postpones or declines, or offers a policy with exclusions, ratings or modifications. Sometimes an exclusion can be added back later if you show the condition has been followed and is under control.
A short clip from his webinar for residents and fellows, with captions.
Watch the full webinar from 21:26What they look at
They ask about your current and past health and pre-existing medical and psychological conditions. They look at insurance company billing codes, run a pharmacy database check for prescriptions in your name, get medical records, and ask about family history. Insurance companies want to know who they're aligning themselves with for the next 20 or 30 years, so they don't leave any stone unturned.
Three possible outcomes
They put it all into the blender. Best case: you're very healthy and they cover you for everything. That happens, but not that often. Worst case: a postpone or decline. And in the middle, which happens all too often, you get a policy with modifications, ratings or exclusions: certain body parts or conditions carved out, a higher price, certain features not offered, or a combination.
You may think something is minor, and the insurance company may not.
Exclusions aren't always permanent
Here's my own example. Before I got my disability policy, I'd had skin cancer, and it was on my record. The insurance company gave me a policy and didn't charge me more, but excluded my skin. They said if I came back in a few years and showed I'd gone for follow-up and everything was fine, they'd put it back on the policy. I did, and they did. Not every situation works out like that, but it can.
Where Jay covers this
Jump to each moment in his webinars.