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What Is Too Much Life Insurance Risk?

We had a call today from a man who has been trying and failing to get traditional life insurance (not graded or guaranteed issue) and has stable stage 3 kidney disease. He has been told by all companies he has approached that he cannot get life insurance due to the kidney disease, and to the best of our knowledge that is accurate. The guy was very thoughtful and intelligent and posed great questions about why would a company approve someone who has something else and not him with his issue. In spite of the fact that we believe we know the answer, we still are taking the time to shop it and make sure that stage 3 kidney disease is a show stopper for all the life insurance companies we represent

The question goes right to the heart of life insurance, risk analysis and risk acceptance. It is the analysis of large numbers, actuarial statistics, that helps a company to analyze risk. How does this person with type 1 diabetes compare to the average population life insurance mortality assumptions? Over the huge numbers that make up actuarial tables is the person with diabetes, on average, going to live about the same length of time as the general population, or 5 years less? 10 years less? If it is an acceptable risk then they have to decide how to price it using the standard rate class as the average population. We understand that most people’s assumptions are that the general population are the ones paying $13 a month for $250,000 of life insurance, preferred plus, best or elite prices. We wish!

Then there is the choice of risk acceptance and here is where the whole life insurance industry seems to be a bit psychotic from the outside. Ok, they look a bit psychotic from this end sometimes too, but the truth is that most companies have a very low risk tolerance on the life insurance they issue. This shows either in unreasonably high rates or just a decline, not accepting the life insurance risk at all. But all companies don’t weigh mortality risk the same. Some, no most, companies are just conservative, are that way because their share holders and board of directors want it that way, and will be that way long after we’re all gone. When we say most we are sticking with a figure we’ve thrown out before, most equaling about 99.5% of the companies licensed in the US to sell life insurance. But some companies, a whopping .5% (about 20), have matured beyond the need to be timid about looking at risk from a 2013 perspective. They may agree that someone, for instance with a stage 0 or 1 melanoma history, can’t get their very best life insurance rates, but we placed a policy just recently in that category at a major company’s second best rate. All of the 99.5% would either decline the same life insurance application or rate it highly enough that just because of the amount of premium being paid the risk would be more than covered. Not just covered. More than covered.

If you just consider the odds of finding the right agent using the right insurance companies if you have a health issue looking for life insurance, you begin to understand why we are screaming at the top of our lungs to get the word out. Far too many people give up their quest for life insurance because they can’t find their way to that sane .5% island where people are treated fairly. If you have any questions or would like to find out how to turn your life insurance decline into an approval, call or email. We can help.

About the Author

Every year millions are needlessly declined for life insurance or approved and paying far more than they need to. For 14 years, I have specialized in turning those situations around and finding the right life insurance solution at affordable rates. I give every client the personal attention they deserve.

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