This is the sixth post in a long sequence where I want to share stories of real people I have met either while working with a life insurance company, or as an independent investment adviser. My goal is to share their stories so I can impart the lessons I learned in the hopes that these lessons will also serve others - this is for you, my readers!
*All my subjects will be either John or Mary, for privacy reasons.
As we are approaching the holidays, and that is a time to be spent with family, I want to talk about the different obstacles that are in the way of setting up life insurance on oneself - mainly, health issues. I mentioned a few times before that there are medical conditions that determine that a person cannot qualify for life insurance - this is known as decline in insurance lingo (or even autodecline - meaning it is for sure a decline, so there is no point in event sending the info to underwriting) - and this applies to most policies. The only exception are the guaranteed insurance policies, because they do not ask any medical questions.
Growing up in Romania, I only knew of only one elderly lady who had diabetes. I had a notion of what the condition meant but didn't really understand. While working in the life insurance industry, I met quite a lot of people who had diabetes. During my 8 years with a life insurance company that put me in front of many blue-collar workers, I learned that diabetes in pretty common in the US; in my experience about 20-25% of the people I met had it or had someone in the family who had it.
In and off itself, this wasn't a huge problems for the people I met, front the standpoint of the life insurance company, since they could still qualify for policies; as long as they had the condition under control. The challenges came when the people were not as diligent with keeping it in check as they should be. I came across such cases a few times, and I had to tell them they would not be eligible for coverage. This was a tough job because it was something that they could change with a little work.
The saddest moments with this medical condition happened when I met people with type I diabetes, and especially the children of the prospects. In those cases, about 90% of the times they were declined for coverage. It was hard not being able to help. And this made me a believer in life insurance coverage on the children - despite the advice of famous people within the financial industry who preach against it.
With this said, there are rare cases when the child needs a lot of coverage - and there are specific reasons to have that in place. Most cases, I recommended some coverage in place, that would also allow for an increase at a later time, as needed, up to a certain amount, without further proof of insurability (without having to answer medical questions). This advice that I gave in the past by no means applies to every situation and every family. Each situation is different and should be treated as such - with a professional.
My main reason for sharing this information is that I wish you would all understand the importance of taking care of your health - for many reasons, among which is the ability to protect your family in case of situations that can affect the family emotionally and financially - such as unexpected death.
Just as you cannot buy car insurance after an accident, you cannot purchase life insurance when you need it. It must be in place before you need to make a claim.
Always see a professional for your family's insurance needs. Just like you see a doctor to diagnose and treat your medical conditions, you should talk to an insurance professional that can review your family's needs and advise you appropriately.
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