I get asked a lot of a particular condition is high risk or impaired risk and it just occurred to me that those people perceive themselves to be high risk because no insurance companies want to carry the policy on them. Please forgive me and understand that I know my blog posts are a little blurred right now as I try to get used to some new meds. All of you with bipolar raise your hand if you agree that changing treatment directions is a piece of cake? Ok, you two over there! Hold that thought????
It’s a little easier to wrap a non industry based head around impaired risk. That is simply someone who has an impairment and it makes their insurance harder to get, or maybe impossible. But there is still a gulf of misunderstanding about why life insurance companies can’t charge low rates for low amounts of insurance when they’re filthy rich and $10k won’t hurt them, right?
Well, let’s run these two types of underwriting out and make roadkill out of them so we can all see it from the same perspective. First high risk.
High Risk situations often times aren’t accepted by true or traditional life insurance. When I think high risk insurance I see people whose lives are at risk because of what they do. That could be their job or possibly a hobby. Missionaries are a great example. Traditional life insurance companies have a price for almost all dangerous hobbies, but decline missionaries. We talked the other day about the rapid expansion in civilian contracting opportunities in war zones. For them all we can provide is accidental death and dismemberment which covers most issues up through acts of war or terrorism, and a Natural Causes Only policy for any hole they might fall through. A little pricey but we’re as competitive as anyone in the world and quicker than most. As the post indicated the other day, if you’re going to the top of Mt Everest, and aren’t already going up the hill, an email to ask what insurance is available.
Just because you can’t get burial insurance for yourself or can’t find life insurance for Uncle Eddie so he can leave something behind for you, doesn’t mean you present a “high risk” to the insurance company. The truth is you present no risk at all because they won’t accept your business.
Then there is impaired risk life insurance. If life insurance companies have all of these ways to rate people up through standard, or even starting at standard, and they add on table rating or percentage rating and then, if you’ve been really bad, flat extra charges, why can’t they just have a rate that fits everyone?
The truth is that while we do very well for our clients on impaired risk cases, it’s not that the life insurance companies run out of room to raise the rate, but the customer’s tolerance of the rate vanishes. There is no interest. Let me throw out an example. It’s a good guess on your part that you won’t last another 10 years. Well, the life underwriters know that too, or if you opt for no question life insurance, they’ll just assume it. So they offer a policy that will pay its own death benefit out of your pocket in 8 years or less. They lose some of those bets, but win most of them because it’s so expensive people drop their policies.
One thing you can be sure of, whether it’s Lloyds of London or Guardian Life, they’ll have their rear covered. If you have questions or need additional information, please call or email. We can help.
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