Ed Hinerman On Life Insurance

Life Insurance Underwriting for Gastric Bypass Surgery!

Obesity is at epidemic levels in the US. In the past 20 years the trend toward obesity has been dramatic to the point where there are now only 4 states, Hawaii, Colorado, Massachusetts and Rhode Island, where less than 20% of the population has a body mass index of less than 30.

Two states, Mississippi and West Virginia, are the only states that top 30% of the population being at obese levels.

Obesity is the most talked about topic in my blogs simply because it is topped only by smoking as a situation that has so many potential collateral health issues. You can talk dieting, medication, hypnosis, exercise, and in the end. like Will from ABC’s Fat March put it, “you’re addicted, and until you can break that addiction, none of those things work”.

Certainly a last resort type of choice is gastric bypass surgery. With gastric bypass most of the stomach is stapled off from a very small stomach. The small intestine is then attached to the new small stomach and a person simply cannot eat the way they used to as it takes very little food to be full.

There are some risks to the surgery, but compared with the benefits, if this is the only way a person can effectively get rid of the excess weight, the risks are acceptable to many. I have had clients who have lost anywhere from 100-200 pounds after surgery.

From a life insurance underwriting standpoint, what they want to see post surgery is 1-2 years of stable weight after the weight loss. Generally weight loss will go on for a year or more, so we are talking about 2-4 years after the surgery before most insurance companies will jump on board and reward you with low rates.

Should you wait until after surgery to buy life insurance? My professional recommendation is that, in spite of the fact that the cost may not be as palatable as the food that got you into this situation, you should put as much term insurance in force as you need, or at least as much as you can afford, well before committing to gastric bypass surgery. I simply can’t see any good reason to put off buying insurance you need for 2-4 years if you can afford it.

Bottom line. Life insurance underwriters do reward successful weight loss due by gastric bypass, but it won’t happen soon. Even the most aggressive companies will require a year of stable weight and most will require two years.

1 comment October 18th, 2007

What Is Insurable Interest? Financial justification? Why Is It Important To You?

What if your neighbor, who doesn’t like you at all, could take out life insurance on you without your knowledge or consent? What if you are in your 70’s or 80’s and your child or caregiver could take out life insurance on you without you being a party to what was happening? What if you were a child and your parent could take out a large amount of life insurance on your life?

The life insurance industry check valve for that neighbor is called insurable interest. A person must have a true interest in the person’s life and it’s continuance, in order to meet the threshold of insurable interest. It is this check valve that prevents life insurance policies from being taken out with the idea in mind that a person could be moved on toward premature death, and someone who did not have an interest in their living would profit from that death.

I think we can all agree that having some final expense insurance on a parent or a child is not a bad thing, actually, probably a prudent thing to do. When the amounts become large in comparison to the financial final expense loss, financial justification comes into play.

I have seen cases where parents who carry, say $250,000 of life insurance on themselves, look into carrying a similar amount on a child. Financial justification simply lays out the premise that the amount of insurance should reflect the actual financial loss upon someone’s death. In this case, while losing a child is certainly an emotional trauma and loss, unless the child was an entrepeneur of sorts and you were actually dependent on their income, carrying as much on them as you carry on yourself is crazy.

The very premise of life insurance is that someone who suffers a financial loss due to a death can be made whole again. With that said, financial justification sets aside the idea of using life insurance as an investment or profiting from the purchase of life insurance.

Bottom line. As much as life insurance agents love to make a sale, a good agent will question and refuse to take part in any inquiries that go out of bounds on insurable interest and financial justification.

2 comments October 18th, 2007