Archive for June 11th, 2008
Whenever I do an initial interview with a life insurance client we always touch on “avocation” questions, the dangerous hobby thing. In general the life insurance underwriter wants to know if you are actively increasing your mortality experience by having a good time.
I remember my wife grilling me about my own life insurance when I insisted on a sky diving experience for my 54th birthday. “Are you sure you’re covered?” In my case that was easy. My insurance was already in force and at the time I took the policies that I have out, I didn’t have any plans on skydiving. A distant dream maybe. Something from the “bucket list”, but no plans. In that situation, even if you take up skydiving as a regular hobby, you’re covered. The hinge question is really whether you took out the insurance knowing that you were going to take up skydiving.
Now, as for the other 80-100 folks out there that day all suited up and ready to bail out of a perfectly good airplane, they might not have been in the same situation. So what happens if you’re a skydiver and then, say, get married and have kids and feel like you really ought to be owning some life insurance? I know I harp on this a lot, but this is when you had best find an independent agent that is willing to shop it for you. Going through one of the big on line agencies or going through a local auto and home owner’s agent is going to give you a bad experience, guaranteed.
So, two ways to look at this. You can decide that there is nothing dangerous about sky diving and there are companies that will allow an aviation exclusion that includes skydiving. Think this one through carefully. They aren’t going to buy “the dive didn’t kill him, it was the sudden stop”. Also, because all of the companies I found tie the sky diving to an aviation exclusion, you also won’t be covered if you take up flying as a private pilot. You’re still covered if you’re a passenger, just not as pilot in command. Personally and professionally I don’t recommend putting all of your life insurance eggs in that basket. Consider carrying at least some portion of your life insurance with full coverage.
Full coverage as a skydiver means you will pay what is called a “flat extra” charge, an additional amount per thousand dollars of coverage per year. This will be an additional charge added to what your life insurance would cost if you didn’t do “Dangerous things”. The majority of companies charge a flat extra of $2.50 to $3.00 per thousand for recreational sky divers. So, on $100,000 you would pay $250 to $300 extra per year to be covered. One company really tries to paint you into a box with this breakout “If 50 or less jumps per year tentative $3.00 per $1,000 flat extra. If 51-100 jumps per year tentative $5.00 per $1,000 flat extra. If 101-200 jumps per year tentative $7.50 per $1,000. If over 200 jumps per year tentative $10.00 per $1,000 extra”. Essentially the more exposure the higher the cost.
So, it doesn’t hurt all that bad if you need $100,000, but what if you really need $500,000 and that flat extra is going to add $1250 per year. If budget isn’t an issue I say cover yourself completely. If budget is an issue, consider carrying two policies. One policy could have a sky diving exclusion and the other could have full coverage. If you die from anything other than sky diving, the death benefit is $500,000. If you die from the sudden stop, it’s $250,000. It may not be having your cake and eating it too, but your widow won’t be nearly as ticked as if you had completely excluded it.
Scuba diving, comparatively, is a piece of cake. If you are a truly certified recreational diver there are several companies that will hang in there with their best rate as long as you’re not diving below 100′, 130′ with one of them. You also need to resist the temptations of wreck and cave diving. Once you break the barrier into deep, wreck, cave or ice diving, hold on to your flat extra wallet.
Cliff diving? I have no idea. If you’re doing it professionally I suspect the insurance companies will freak out and charge some monstrous flat extra. If you are doing it recreationally at the lake, it will probably come down to how you answer the question on the application that says, “and any other dangerous hobbies?” If you don’t consider it dangerous the answer is no and it shouldn’t be discussed any further. I’ve never seen an application that specifically asks about cliff diving.
Bottom line. If you’re not sure if your hobbies are covered, ask a life insurance agent to review your coverage. It really hinges on when you took out the coverage and when you took up the hobby.
June 11th, 2008
When you apply for life insurance it is not a given that you will get what you want or what you believe you deserve. By far the majority of policies are approved with no surprises. A smaller percentage are approved but at a different rate. And a small percentage are declined by the insurance company because they perceive the risk to be unacceptable.
So why do declines happen? What are the most common reasons that a perfectly good application can result in complete rejection? What impact does a decline have on your ability to get insurance through another company?
The most common reasons are:
1. Something comes up on the lab results that neither you or the agent knew about. It has not been an uncommon occurrence for clients to find out, due to the life insurance exam, that they have prostate cancer, hepatitis, diabetes or the beginning stages of coronary artery disease (CAD). I know I blog all the time about how you can get life insurance with these conditions, but that assumes that you know about it, are treating or have treated it, and it is cured or under control. This reason for decline happens most frequently with people who don’t see the value of an occasional physical.
2. Non compliance with your doctor. For those who do visit the doctor occasionally, there is often a recommendation to have something looked into further or perhaps a recommendation to come back for a follow up in 6 months. Sometimes the doctor will give you a referral for say, a stress test or additional lab work. Plenty of folks blow those things off because they feel fine and can’t see wasting the money. Life insurance underwriters have a zero tolerance for people who don’t do what is recommended by the doctor (that they went to for a checkup and advice).
3. Stupidity. I had a client who had colon cancer about 13 years before he came to me. They removed part of his colon, did chemo and radiation, and he had not been back to a doctor since. It really kind of takes gall to even apply for life insurance with that attitude. Why would a company insure you when you don’t even care if you live?
4. Assuming that some past medical history doesn’t matter. Even though I start my relationship with every client with a health interview that starts with the preface, “Have you ever been diagnosed with or been treated for…” and ends with “Is there anything that I haven’t asked that might come up in your medical records..”, people will choose to leave something out because they don’t believe it’s relevant. When the medical records are acquired and the decline hits, the responses run along these lines. “I didn’t think anything mattered after 10 years”. “My doctor said I was as good as new after my heart surgery”. “Well, I didn’t think that was any of your business”. The quotes you receive and the end result are only as good as your honesty and forthrightness. Nothing is irrelevant until the underwriter says it is.
5. Alcohol abuse. When you drink heavily there is a high likelihood that your liver functions will be elevated. If liver functions are elevated on labs, it triggers the running of an additional test called a CDT. The CDT is an alcohol marker that, while not a diagnostic tool for alcoholism, is a very accurate test indicating whether a person is a heavy drinker. Suffice it to say that a glass of wine with dinner won’t impact your liver or show up on a CDT. A six pack a day is likely to do both.
I am often asked what impact a decline has on a person’s chances of getting insurance in the future. The answer, of course, depends. If the decline is for any of the reasons above and you don’t take care of the problem or become more honest, the result will be the same.
But often a decline by one company may get a completely different result from another company. Very often it is simply a case of the wrong agent taking your business to the wrong company. Could be that the underwriter just had an attitude or made a mistake. We are very successful at turning bad declines into good approvals. To me the nice thing about working a declined case is that all the cards are on the table and when I shop it, I know exactly what company to go to for an approval.
Bottom line. A decline on a life insurance application doesn’t mean you can’t get life insurance and many times you can end up with very reasonable rates. A good independent agent is needed simply because you want a broad range of companies to choose from and generally they will understand the steps to take with your initial bad experience.
June 11th, 2008
I came across this website today Insurance Bits
The website boasts: “Insurance bits for insurance wits” - Insurance is a very hot topic these days. The more you are informed, the wiser decisions you can make. Insurance Bits brings you insurance news from around the globe. (Taken from their About page).
The problem is that they do not reference the original source, nor give credit to the author.
Blog from the Hinerman Group:
A Proud Member of AARP! No, Not Really!
As found on Insurance Bits:
A Proud Member of AARP! No, Not Really!
- Also note that the pdf link - aarp-rip-off - doesn’t work.
In fact, this site does not reference any of the rss feeds they are hoarding, such as Medical News Today and many, many others.
June 11th, 2008
