Cognitive Ability To Obtain Life Insurance?

Over the years I’ve run into plenty of families who only wished their mom or dad still understood and qualified for life insurance. It would likely be a blessing to the family to have it in force, but there’s a point where the family has to admit they’ve missed that window of opportunity.

Mom or Dad has mentally lost the capability, the cognitive understanding of the process that is necessary. Many no longer understand the need for the life insurance and sadly there are families who have their own cognitive impairment when it comes to understanding why allowing families to buy life insurance on those who don’t understand it, well, it’s just a bad idea.

Moms and Dads, family members with traumatic brain injuries and Executives and CEO’s of companies can all hit that wall, the wall when it’s just a little late to think about the life insurance that should have been in place. From personal experience I can tell you that “a little late” can come at a very awkward and inopportune and even devastating time.

While my life insurance is in place, as the CEO of Hinerman Group, if an opportunity came up to expand or invest and it required additional life insurance I would be so much toast because of a head injury I sustained that would make it difficult, if not impossible, to qualify from a cognitive standpoint for new life insurance.

Let’s just kick around a little about cognitive issues and what they have to do with life insurance. Life insurance policies are contracts and when two parties enter into a contract it is imperative and legally necessary that both parties understand the need for the contract, the limits and rights within the contract and who is to benefit from the contract and at what point. For someone with cognitive issues, whether that is inability to understand, comprehend or remember, to enter into a contract of life insurance where someone benefits when they die is, well, dicey at best.

Life insurance history is littered with the remnants of policies that were taken out without the full knowledge of comprehension of the insured party. Far too many policies have been slid through the cracks of parents with cognitive impairments like Alzheimer’s, or children whose life expectancy is short and it’s not that well known.

Among those life insurance stories are companies that would surely fail with the loss of a key employee, CEO or Executive and whose board of directors, or a partner in a partnership have managed to get insurance issued without raising any red flags. They know that once that two year incontestability period is past they’ve won the war.

Bottom line. It’s not fair to involve life insurance companies in insuring lives that present more risk than is apparent and certainly at best, illegal, to ask them to insure someone who doesn’t understand the contract. If you have questions or need additional information or, for any reason, believe you are being eyed for life insurance for inappropriate or illicit gain, call or email me directly. My name is Ed Hinerman. Let’s talk.