Working in the insurance game, you come to understand that many people don’t really understand how it works, which contributes to misconceptions, misunderstandings, and false information. This in turn sometimes leads to people having negative views of the insurance industry. Some people believe that they simply can’t afford any sort of insurance while others have been led to believe that they wouldn’t qualify for any sort of insurance policy.
For example, a few days ago, I was speaking to a client that had had a policy with my company for a few years. As I had only spoken to her over the phone to remind her to pay her premium, I had never seen her face to face. After having met her for the first time, I discovered that she had a few health issues, including an HIV-positive status. Even with her health issues, she was able to secure a guaranteed issue policy.
A guaranteed issue is a policy offered when people have little to no chance of securing a traditional term or whole life policy. This client, who I shall call ‘Marcie’, in turn, referred me to two of her sisters who also had health issues.
In comparison to ‘Marcie’, the two sisters had even more complex health issues that they had been dealing with for a number of years. One of the sisters listed six prescription drugs she was taking. She went on the reveal that taking various pharmaceutical drugs had caused both her hair and teeth to fall out.
Not being a doctor, and thus not having access to her medical records, I can’t substantiate her claim, but that wasn’t my objective. I will simply point out that, unless these women resided in some sort of nursing home or were under hospice care, even they could qualify for a guaranteed issue policy.
What’s the catch, you might ask? Well, that depends on what you consider a ‘catch’. The truth is that the one condition that an applicant would need to meet under a guarantee issue would be that they must live at least two years. If they didn’t survive for two years after the policy went into effect, they would receive the total of all of the premiums they paid into the policy plus 5% interest. In some circumstances, the company may request that the applicant respond to some health-related questions on a questionnaire as well as reveal what medications they were taking regularly.
Considering the fact that many companies wouldn’t cover them, I firmly believe that this stipulation is actually reasonable. What are some of the reasons that people get declined for life insurance? There are numerous reasons including heart disease, dementia, AIDS, and kidney failure among other issues. Chris Abrams listed 25 reasons why people could get denied coverage. I wouldn’t doubt if there were more.
Now, I’m sure there are those who look at insurance companies refusing to cover certain people as cruel or heartless and, to be truthful, I’d understand if people saw it that way. But the reality is that insurance companies, like other companies, are in business to make money and if they feel that they are confronted with a situation that could be detrimental to the financial well-being of their company, they will act accordingly.
As insurance companies are considered part of the financial services industry, it’s really not difficult to understand why. If clients that had chronic illnesses that would eventually lead to their premature death were the vast majority of insurance companies’ clients and they were constantly having to pay out large sums of money due to widespread early deaths, these companies probably wouldn’t stay afloat too long.
But that’s the nature of the business. Any company that wanted to turn a profit year after year wouldn’t accomplish this goal if they consistently spent more money than they earned just to keep doors open. Always remember, it’s business, never personal.
My point here is if you’re someone that has had a problem securing life insurance due to your health condition, contact me. I just may be able to get you some coverage.