Ed Hinerman On Life Insurance

Five Criteria For Affordable Life Insurance If You Have Bipolar Disorder!

Let me just reiterate from previous posts that if you have bipolar disorder, you can expect for almost all life insurance companies to decline you. They don’t care to what degree the disorder impacts your life. They put the completely functional CEO of a company in the same boat as the person who is on disability due to bipolar.

Insurance companies, even though they are in the job of assessing and accepting risk, will often simply put an entire risk pool into the decline bucket rather than learning about the vast differences that can occur within that pool. Are they mean? Probably not. They make business decisions about the time and resources and the risk and simply decide that, for instance, bipolar is not an arena they want to become a player in.

The good news is that there are a handful of companies, a dozen or so, that have done their home work and have decided that within certain perameters bipolar disorder is an acceptable risk. That is to say that within those perameters, standard or better rates can be had, which puts the person that has been stigmatized by the disorder and puts them squarely back in to average and above average rate classes.

So, how to get there? Like any health issue, underwriters are looking for control. They don’t want to see out of control high blood pressure or cholesterol and they really aren’t interested in underwriting out of control bipolar. Control in the context of bipolar is measured by how stable and functional a person is in life. If they have a stable work and family life, well, let’s face it, they are probably above average.

Like other health issues, underwriters want to see compliance with treatment. They decline people with diabetes or heart disease because they don’t follow the doctor’s orders and recommendations. If you have bipolar and march to the beat of your own treatment drummer, ignoring prescribed treatment and missing appointments, don’t expect to get a gold star from an underwriter.

Being on disability due to bipolar, or obesity, or diabetes screams lack of control. If your situation is well controlled there is no reason to be on disability. So forget the argument that everything is under control as long as you can stay home and not have to deal with the real world.

If you have attempted suicide, whether you are bipolar or not, for obvious reasons there is some concern about you as a life insurance risk. Even the dozen or so progressive companies that are willing to work at leveling the playing field for those with bipolar, will call the game on account of suicide attempts.

The last hurdle is hospitalization. Most people with bipolar have visited a hospital at least once, generally when they were diagnosed. Sometimes it just takes that structured inpatient setting to get to the bottom of things. That particular stay in a hospital isn’t of great concern to an underwriter because that is the end of the confusion about whats going on and the beginning of the treatment.

Being hospitalized after diagnosis and treatment have begun is more problematic. To a significant degree, that breakdown represents lack on control or yet to be achieved control. Expect that some years will have to pass after these episodes before life insurance underwriters will want to jump on your wagon.

Bottom line. It takes an independent agent to know where to go and where not to go to help you find life insurance if you are anything but young, healthy and unscarred by all the possible afflictions of life. Seek out an agent who has knowledge and understanding of your situation. There is good news out there for a large percentage of those with bipolar, so don’t be discouraged.

1 comment February 26th, 2008

Why Term Insurance?

I field a high number of calls asking about whether people should buy term insurance, universal life or whole life, and in some cases they will have heard of, and ask about return of premium term insurance.

Now is not the time to hold back my feelings on this, so I am going to lay out the arguments I hear for not buying term and then you get to find out how I really feel.

1. But if I buy term and don’t die I will have wasted all that money…..

2. I want something that builds cash value so I can borrow against it……

3. What if I get to the end of my term and still need insurance……

I’m just going to address these questions in the most common scenario. Husband and father providing life insurance for the benefit of wife and children. For the average person in this scenario, your life insurance needs are not permanent. If you are in your 30’s or 40’s, married with children, most of your needs for life insurance will be gone by the time you are 65 or 70. Before you scream, I did say most, not all.

Unless you have a child that will be dependent on you for life due to a physical or mental disability, you have absolutely no obligation to carry life insurance for them past the point where they go out on their own. “But I’d like to leave them something!” Good! When they leave home, drop the insurance and start contributing to a retirement fund for them. In fact, if you bought term insurance rather than the other types you would have had enough money left over to be putting money away for them all along.

Sorry, I got emotionally off track. Wasted all that money?? You protected your family against disaster for all those years and that was a waste of money? You did it as inexpensively as it can be done and it was a waste? Try this for an exercise. Get gut honest with yourself and write down what you spend in a month that is just “blow money”. Money you spent that didn’t do anything but satisfy your desire at the moment. Beer, cigarettes, satellite TV, pay TV, new clothes when you have plenty already, sodas, snacks, eating out rather than cooking meals. Add all that up for a month and in most cases it will come to more than it would cost to very adequately insure yourself with a 30 or 35 year term policy.

But you say you don’t want to give all that stuff up? Do you get your money back when you’re through blowing it? Did it protect your family?

You want to buy whole life insurance so you can borrow against the cash value. Just two quick points. The cash value comes from you. Whole life is not a magic money machine. And, you have to pay it back or your policy will either collapse or the death benefit will be smaller than you intended. Ok, three points. You can’t afford to adequately insure yourself with whole life insurance. So, you want to put your family at risk by underinsuring so that you can borrow against the policy and possibly make the death benefit even smaller or nothing at all?

If you get to the end of your term and still need insurance, it will likely be a small amount having outlived children, jobs and mortgages. Once you are past the big three of life insurance needs, a small universal life policy should suffice, and you can convert that from your term policy without evidence of insurability.

Bottom line. Talk it through. Think it through. Don’t throw money away.

4 comments February 26th, 2008