We know that from our end of the impaired risk life insurance business there isn’t much that is more frustrating than working hard on an application only to have it declined because of information the client withheld. It’s an understandable thing that we don’t all remember 100% of our medical history, but there are plenty of clients who kind of skirt around answers or just don’t answer them truthfully. It is also a problem that some clients will claim confusion because their doctors tell them there isn’t anything to be concerned about, so when that impairment or issue is asked about they treat it as if the answer is no, when it really should be yes and then provide all the information possible to show your doctor’s opinion.
This is almost too cheesy to use as an example, but consider this recent case. When we initially interviewed the attorney and asked life insurance questions, he answered no to having used drugs. On the application he answered the question about past drug use no and signed it. On the exam he admitted that he used to smoke marijuana. Hang on to that thought because it is in one of two states that have made marijuana use legal. Early on in the underwriting process he was asked by the company to complete a drug and alcohol questionnaire. On that he admitted that he rarely smoked pot and the last time was 5 months ago. Well, instead of the preferred plus rate he applied for he was offered a standard plus non smoker rate, the rate someone would get if they admitted current occasional marijuana use. He had tested positive for pot on the life insurance exam. After fussing about the rate increase for a while he finally accepted it and put it in force. Just an fyi! We have asked the companies that are most aggressive on approvals for pot smokers if they anticipate being any more lenient in states that have made it legal and the answer is no. If you are an occasional marijuana user, at best you will get standard plus non smoking life insurance rates. At worst you will be declined or given smoker rates.
American General announced just recently that if someone lies on an application that they will not only decline the application but refuse to accept any more applications from them for two years. We are in favor of this because it will strengthen the process in three ways. 1. Just the possibility of being declined life insurance for not being honest, we believe, will provide some amount of deterrence for clients who might be tempted. 2. The possibility of that type of action will hopefully prompt life insurance agents who are lazy about health questions to be more aggressive and 3. For those who do go through all the questions every time we interview a client, adding at the end when we question about any other information that might come from their medical records, it allows us to put some bite in the question by adding that there are companies who will decline applications due to a lack of candor.
And, of course, there is always the risk of your life insurance being approved without having been truthful, and the policy being successfully contested because you withheld information. If you have any questions or have worked with a life insurance agent who led you to believe that not all information is relevant, call or email. We can help.
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