Posts filed under 'scuba diving'
I did a series of posts last year on life insurance policies and have referred back to those posts on several occasions when explaining some specific clauses and options such as the suicide clause and incontestability clause and the conversion option.
Now I would like to start from the beginning and talk about the application. The application itself has been something of a sore point with some customers and for a few who are more concerned than the average person with identity theft, a cause for deciding against applying. I have actually had clients pull the plug completely on purchasing life insurance to protect their family because of questions about their social security number, their income and their net worth.
For the purposes of this subject I’ve chosen to use a West Coast Life insurance application mostly due to the simplicity of the document. west-coast-life-application Notice that they don’t beat around the bush with identity information. Coming out of the first line of the application they have your name, date of birth, social security and driver’s license numbers.
The social security number is right up there with the most frequent “Why do they need to know that?” questions I get. It’s not questioned that often, but probably 1 out of every 100 clients has some issue with it. There are really two reasons. The SSN is used to confirm identity on both the application and upon death. The other reason is that your death is an event that has to be reported to the IRS. Even though the death benefit is not income taxable to your beneficiary, the amount of the death benefit is added to the gross value of your estate for estate tax purposes unless it is owned by a life insurance trust. So, like it or not, if you want life insurance you’re going to have to share your social security number.
I get less grief over the driver’s license number, but the reason for the life insurance company having it is because most life insurance applications require a copy of your motor vehicle record. Most people never think about it, but the type of driver you are does have some impact on your mortality risk.
The application then moves into your occupation. While you do need to provide your employment information, I can honestly say that I haven’t heard that insurance companies necessarily verify your employment. But here is where two other questions come up that people aren’t that keen on sharing the answers to, income and net worth. “Why do they need to know that.” The need is less sinister than those who are concerned about might think. Income and/or net worth are determining factors in how much life insurance a company will underwrite on an individual. For non estate purposes, a multiple of income determines the max. For estate tax purposes, the amount of insurance is determined by the net worth minus the exemption times the tax rate. So, they don’t really care or necessarily check on how much you make, but the insurance companies do have some interest in not insuring someone who makes $20,000 a year for $2,000,000. That goes a bit beyond the whole replacement of income idea.
Next comes a synopsis of the type and amount of coverage being applied for followed by the beneficiary designations. It’s important to note that the application actually becomes part of the policy when approved and issued and the beneficiary designation in the application is actually the only place in the policy where the designation is noted.
This is followed by non medical history covering such things as foreign travel and whether or not you are a private pilot. After that is medical history. The application is kind of a synopsis in these areas. If there is more information needed in non medical history questionnaires are completed for things such as aviation, scuba diving or foreign travel. A more complete medical history is done during the exam.
And last on the list of information needed is a list of life insurance currently in force and whether you intend to replace it or not. This is another area where people get a little testy, thinking that it’s not the business of the company to know whether they are replacing anything or not. But keep in mind that it is the business of the company to know whether they are going to be a party to over insuring you. It is also the business of the company to be compliant with state laws and provide the appropriate forms for replacement.
Bottom line. There are a lot of personal questions on a life insurance application. It’s important to keep in mind that they have have valid, important reasons.
April 27th, 2009
I finally got my wife to look the other way while I jumped out of an airplane for my 54th birthday. She’s always so nice about asking me what I want for my birthday, and for the past 5 years I had
been telling her I wanted to try skydiving and that would be a href="http://www.mile-hi-skydiving.com/tandemEx.php">great present. She steadfastly refused, not wanting to be a party to my smashing demise on an airport runway. So, having paid for it myself and knowing that my life insurance was all current, it’s a perfect example to discuss how life insurance companies feel about you taking up risky hobbies after you already have insurance in force.
The whole thing hinges on a simple question. Were you actively planning on doing the activity when you took out the insurance? Hoping to do something at some point in the future is not actively planning. Hoping for it, dreaming about it and asking for it for your birthday don’t constitute actively planning. Having a date set to jump out of the airplane is actively planning. If you weren’t actively planning when you took out your life insurance policy, you’re covered.
A current client is a good example of this. He travels all over the world in his business and we divulged all of the places he travels or has plans to travel to on a questionnaire that went with the application. The policy was approved, but before he put it in force he called and asked, “Will this policy cover me if I start traveling to places that weren’t on the foreign travel questionnaire?” Since he doesn’t have any current plans to do so, the answer was yes.
This question has been brought up by a number of my private pilot clients. In many cases they were ready to dump life insurance policies that they had taken out prior to becoming a pilot. So my question to them was, “at the time you took the policy out, were you actively planning to start training as a pilot? Had you signed up as a student pilot?” If the answer was no, their old policy covered them. They also ask about future changes in their aviation activities. If, down the road, they get an opportunity build and fly an experimental airplane, as long as it wasn’t planned at the time the insurance went in force, they’re good to go and fully covered.
From an insurance company point of view, when they underwrite your policy there is an assumption that people with bad habits will stop them and people without bad habits will find some. I have had clients that started smoking after they had insurance in force as a non smoker. They were fully covered even if they died from a smoking related cancer death. It is not uncommon for a recreational scuba diver to take up wreck or cave diving after a while. As long as they didn’t plan on doing wreck or cave diving when they took out a policy, it’s covered.
As for me and my 54th birthday flight of fancy, I was covered. And it was awesome.
Bottom line. Insurance companies don’t assume your life will remain static after they approve your policy. Before you run out and look for new insurance because of a lifestyle change, have your policy reviewed by an independent agent. You may be covered already.
March 31st, 2009
It’s been a fascinating couple of years. I will sum it up by saying that we have helped a lot of people get life insurance who never thought they could. And what better way to celebrate the information we’ve shared and the victories we’ve had than with a shared meal, a key word salad.
Diabetes has been at the forefront of our life insurance efforts from the very start. We’ve made huge headway in finding aggressive underwriting for type 1 diabetes and type 2 diabetes. I think our strong point has been in education. There are a lot more people out there today that know what their A1c is than when we started.
I’ve been very clear about where some of the problems lie in our industry. The AARP/New York Life collaboration, on what can only be described as a sick crime against older folks, continue to offer the worst term insurance and whole life insurance in the business. They are simply not the advocate they claim to be.
I’ve stepped on some toes along the way. Selectquote and Zander Life insurance have taken exception to some of my observations. Being a Dave Ramsey fan and I think, ultimately, a reasonable person, I did apologize to Zander. In spite of Selectquote’s berating commentary, I still stand by my assertion that they are biased in what companies they offer (otherwise they wouldn’t be so easy to beat) and I still believe that Suze Orman should go back to waitressing. As to their assertion that I only use Selectquote and Suze Orman for search engine optimization, well, I don’t, even though they think I do. If I didn’t think there was better service elsewhere and more honest advertising, I would never have mentioned Selectquote.
We’ve touched on scuba diving and Prudential being a leader in great rates for recreational divers. Pru also stomps the competition on prostate cancer, sleep apnea and mild anxiety issues. While providing direction on those issues we have also been able to provide direction for those involved in skydiving and foreign travel to places where kidnap and ransom insurance is more than just a casual thought.
We’ve stayed abreast of the economic meltdown and recession that have whacked us all and tried to help people understand how best to handle their life insurance needs in these tight times.
We’ve held lengthy discussions about obesity and the impact it can have on other health issues such as hypertension or high blood pressure, cholesterol, heart disease, heart attack, stroke and cancer. We’ve discussed the risk and benefits of gastric bypass surgery as a means to avoid the life threatening side effects of being over weight.
Probably our biggest response has been from those suffering from depression and bipolar disorder. We reached a group of people that have truly been black balled in the insurance industry and we’ve been able to find some level headed underwriting and hit some major home runs for those who have the name tag but lead normal lives.
We have bared the facts behind the black eye of all black eyes in the insurance industry, the non guaranteed whole life, universal life and variable universal life policies and explained the alternatives in the permanent insurance market. There is nothing that provides greater value and peace of mind than a rock solid guarantee.
We’ve had frank discussions about business life insurance such as key man insurance and buy/sell life insurance. We did a whole series on women and life insurance. We’ve provided direction and information to private pilots that they aren’t getting anywhere else. We’ve talked about the guts of the policy when it comes to the two year suicide and incontestability clause and the accelerated death benefit and the beneficiary rights and the beneficiary issues for those who aren’t in a legal relationship such as a gay couple or an unmarried couple.
Bottom line. And the list goes on and on. We’ve tried to leave no stone unturned and no question unanswered in our quest to find life insurance for those whose mortality risk might be more challenging than average. As an independent agent it has been gratifying to have so many ways to help those who have been mishandled by the wrong agent or the wrong company. As we continue to reach out my prayer is that all who need help find it, and that more agents consider serving those who are harder to help.
March 18th, 2009
Part of every life insurance interview has to do with extreme or dangerous activities. Often when I ask clients about whether they participate in anything like that, they will answer something like, “Well, I golf or fish. Does that count?”
It seems after today that I may have to be a bit more prying about the question, especially if fishing is their answer to dangerous activities. Today’s news reveals someone that a life insurance company might very well take exception to approving coverage for. When I get an answer about fishing I really never considered someone jumping out of a helicopter on to the back of a marlin.
All companies have some form of the question that is worded to weed out guys or women who might participate in something that has inherent dangers. A good example would be scuba diving. While recreational diving of 100′ or less is generally not an issue with several companies, when you start going deep or get into wreck or cave diving, risk increases and so does the cost of life insurance.
Bottom line. Be straight up with your agent. If you do participate in activities that someone other than you might consider hazardous, talk about it. A good independent agent should be able to find a company that will fit your needs at a reasonable rate.
March 12th, 2009
I’m often asked, after the fact, what it takes to get the best life insurance rates. While I would be hard pressed to cover everything that could be hiding in your medical records, I can provide a general rundown based on the exam, labs, family and personal history.
Generally a person can’t have used any kind of tobacco or nicotine products in the last 5 years. They test for it and while the test really won’t show anything more than a month or two old, medical records almost always indicate if a person is smoking or uses other types of tobacco. If you say no and die during the incontestability period due to lung cancer, you better figure they will be asking people who were around you prior to your death.
Family history generally holds the best rate at “No cardiovascular disease or cancer prior to age 60″ for your mother, father and full siblings. A few companies say no death prior to age 70 and a few add diabetes to the before age 60 list.
A few companies allow blood pressure treatment for their best rate. Most don’t allow it. Either way, good control is a must with 135/80 being a pretty standard benchmark. Some allow 140/80. That’s actually pretty liberal. Most healthy folks are more in the 120/75 and under range.
Cholesterol treatment is being accepted for the best rate class by more companies all the time. That being said, good control is being looked at more stringently than ever before. The old benchmark for most companies was a total cholesterol of 220 and HDL of at least 40 giving a ratio of 5 or less. Some companies are going as low as 205 and a ratio of 4.5 for their best rate now.
The only cancer history acceptable at the best rate class is one instance of basal cell carcinoma. Multiple basal cells can be OK with some companies, but any other cancer history will end your chances for the best rate class.
Your driving record counts. Most companies won’t allow more than one moving violation in the last 3 years and yes, they will pull an MVR and check. Best case for the best rate would also include no reckless driving, DUI’s, license suspension or revocation in the last 5 years. Many companies are more stringent on the DUI topic.
Private pilots can only get the best rate from a few companies and they generally have to be well qualified. Instrument rating and enough total hours and annual hours to be considered experienced is a must.
Hazardous activities is kind of a crap shoot. Scuba diving can be ok if you aren’t going below 100′. Skydiving never gets the best class. Rock or mountain climbing, car or motorcycle racing and extreme sports will almost always bump you out of running for the best rates.
The last of the general underwriting guidelines is build. All companies have height/weight charts that they use and for the most part they run pretty much the same. Using my height of 5′10″, a sample of weights for best class are American General at 195, Banner at 196, Genworth at 193 and probably the most generous is Prudential at 202.
Bottom line. They don’t just ask how you’re feeling and give you a policy at the best rate. There are a lot of people who say these rates simply aren’t attainable, especially at older ages, but plenty of my clients receive offers in the best rate class and the oldest of those was 79 at the time.
February 17th, 2009
You’ve got some good news and you’ve got some bad news when it comes to life insurance underwriting for scuba divers.
The good news is that there are still plenty of opportunities out there for preferred plus and preferred rates for those recreational divers who don’t go below 100′. And let’s be real, 95% of recreational diving takes place at depths above 70′, so allowing 100′ at the best rate class really covers recreational.
Advanced open water is where the real shift in underwriting has occurred. Genworth Life and Annuity used to be open to the idea of best class down to 130′ on a “case by case” basis, and Prudential didn’t make any bones about, preferred best was allowed down to that depth. Now Genworth has gone to a standard rate for those who swim below 100′ and Prudential wants to charge $2.50 per thousand dollars worth of insurance extra, but will still take a case by case look at it for better premiums.
The glint of gold in the pan for those going below 100′ is John Hancock who will still go preferred down to 120′. The only catch with John is that their minimum face amount for term insurance is $750,000.
Bottom line. Scuba will never take the hit that sky diving does, but for those advanced divers who didn’t take advantage of Genworth and Pru before, oh well!!
January 15th, 2009
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
