Probably very close to 100% of the time a person can go about obtaining life insurance with the traditional application, exam and underwriting period. But there are exceptions.
The truth is I don’t recommend that anyone that needs life insurance and doesn’t have any in force, #1 waits to apply and #2 gets a temporary insurance agreement binding the coverage during the application process. No kidding. People really do die unexpectedly far more often than most people would like to believe. Putting off needed life insurance or not binding it during the application process is stupid if they don’t already have coverage in force.
If there is coverage in force that is affordable and adequate, then no harm, no foul if you take your time applying and don’t put out money to bind the coverage through the application process.
There are times in business that absolutely require applications for life insurance to have a temporary insurance agreement. If a bank is going to feel comfortable approving a loan they want to know that an agreement is in place and that there is a reasonable expectation that the policy will be approved and issued.
I have a client that I’m currently working with who took that route and was subsequently declined due to abnormal lab results. After he got checked out he found out that he had a health issue that was going to render him unable to get life insurance for at least two years or longer. The only thing standing between him and the business loan he needed in order to expand was a life insurance policy and he couldn’t produce one.
When people think of Lloyds of London and HCC Insurance they usually think of travel insurance or insurance for celebrities or pro athletes, but they also have a specialty life insurance that is used only for contractual business situations. In this case, even though not insurable anywhere else, HCC came through with the approved life insurance that the client needed in order to close on the loan. He can use that for a few years until he is insurable through more traditional life insurance. His current health issue is excluded from the coverage, but his current health issue has a 99+% five year survival rate. He’s not worried about dying from that.
The business applications for this specialty life insurance are just as numerous as the applications for traditional life insurance. Every CEO, executive or professional should know about this. What can partners do if the need to fund a buy/sell agreement and one or both of them are not insurable through normal channels? What can a business man do when he finds out that he isn’t able to get life insurance when applying for a large business loan that requires it? Smaller loans might be able the be handled through other collateral, but smart business people aren’t going to tie up millions in collateral if there is life insurance available.
What happens when key person life insurance is needed and the key person can’t get that business life insurance because of health issues?
Bottom line. Lloyds and HCC don’t just cover model’s legs or pro tennis player’s elbows. They have some seriously good business products and AD&D products for people doing business in dangerous areas of the world. If you have a business life insurance need that can’t be met through traditional avenues, call or email me directly for a confidential consultation.