Life Insurance Options If You Had Cancer

What are your options if you had cancer in the past and you want life insurance? The type of cancer matters. Insurance companies are okay with basal cell skin cancer. They are also okay when the affected organ is removed. For instance, if you have a radical mastectomy after having breast cancer, the insurance company will act as if the cancer never occurred. The length of your remission plays a big role. If you’ve been in remission for two or more years, you should be able to get simplified-issue-whole-life. Keep in mind that medications may impact your approval. Some companies are friendly toward cancer maintenance drugs. Other companies seem to imply that you still have cancer if you are using cancer drugs (even if you’ve been in remission for a long time).

Many people who had cancer in the past head straight for guaranteed issue products without considering alternatives. It’s easy to understand why. Guaranteed issue products don’t ask medical questions, which many people like. People with a history of cancer fear being rejected by insurance companies. Emotions are not the only thing at stake with rejection; some companies specifically ask if a denial of coverage occurred in the past (insurance companies may deny coverage if another company denied coverage). Therefore, if you are not going with a guaranteed issue product, make sure your agent is trying to place you in a policy that has a high probability of approval. That way you won’t have a denial on your record (insurance companies can track denials in a database called MIB). Despite the positives of guaranteed issue, it shouldn’t be your first choice. Guaranteed issue comes with a two year waiting period for full coverage. Immediate full coverage should always be your goal. If you have any questions, don’t hesitate to contact us.

The Problem with Guaranteed Issue Life Insurance

Guaranteed issue life insurance is also known as guaranteed acceptance life insurance. This type of plan doesn’t provide full coverage until a two year waiting period expires. Many guaranteed issue plans are sold directly to consumers without an agent. Insurance companies that sell direct to consumers are financially incentivized to sell as many of these policies as possible. Insurance agents, on the other hand, have a disincentive to sell these policies. Agents take a drastic pay cut on guaranteed issue plans. This means that agents fight to get their clients a better policy because the commission is better. Agents should do the right thing because of ethics, but its nice to know that a financial incentive also causes them to do good.

People assume that serious health events such as cancer and heart attacks will disqualify them from everything other than guaranteed issue. An agent may be able to challenge that assumption, but if people buy direct from the insurance company without talking to an agent, that assumption will go unchallenged. In reality, that assumption is often false. Many serious health events become irrelevant for simplified issue whole life once two years has passed.

Life Insurance for Dangerous Jobs

Do you have a dangerous job and need life insurance? Most types of life insurance ask at least one underwriting question about your occupation. You can either do things the hard way, finding a company willing to accept your particular occupation, or you can simply go with a type of policy that doesn’t ask occupation questions. Is it fair if the insurance company doesn’t ask about a risky job and you have one? Yes, the insurance companies are very much aware of the risk factors out there. If they don’t ask a question, it’s because they don’t care about that risk or they already beefed up their premium to account for a certain percentage of people with dangerous jobs. As far as I know, all term life policies want to know what job you have (guaranteed issue term life is probably the one exception). Whole life policies also ask about occupation, except for simplified issue whole life and guaranteed issue whole life. Guaranteed issue products are not the best option because that product is designed for the most extreme risk, such as someone who was just diagnosed with cancer or terminal illness. You’ll end up with coverage limitations (2 year waiting period) and higher premiums if you go with guaranteed issue. Therefore, the best thing to use for dangerous jobs is a simplified issue whole life policy. With simplified-issue, there are no occupation questions, but there are questions to eliminate high risk medical problems. This allows you to have a policy with lower premiums and no coverage limitations.

Should I Replace My Life Insurance Policy If I Find A Better One?

This post discusses the good and bad reasons for replacing a life insurance policy.

I read life insurance articles all the time. One article that I read said replacements are typically a bad idea. As an agent, I know there are legitimate and illegitimate reasons for replacing a life insurance policy, but I would never make a blanket statement that replacements are generally good or bad. That would be irresponsible. Let’s start off discussing legitimate reasons for replacing a policy.

When it comes to simplified issue whole life, underwriters don’t care about certain medical events such as heart attacks if the event occurred long enough in the past. In fact, someone can have a dozen heart attacks and it wouldn’t matter as long as he or she passes the time threshold (agents call this the lookback period). I’ll explain why the lookback period matters when considering a replacement. Let’s assume someone was scared into buying a life insurance policy because he or she had a heart attack less than a year ago. That person would be limited to modified whole life. Modified whole life (sometimes referred to as graded whole life) has a two or three year waiting period for full coverage. During this waiting period, the full death benefit is only paid out for an accidental death. Let’s assume a year passes and the same person can now qualify for ordinary whole life (no waiting period). Replacing a modified whole life policy with ordinary whole life is appropriate in this situation.

That last example was an obvious one. A less obvious choice occurs when the same type of policy with the same amount of coverage is considered for replacement because of price. Many agents will point out that a replacement starts a new contestability period. A contestability period is a two year period from the start of a policy in which the insurance company can investigate a death claim. The consumer risk associated with a contestability period is sometimes overstated. As long as the insured was honest on the application, there is nothing to worry about except for a slight delay in benefit payments as the insurance company investigates the claim.

If there is only a slight price difference between the old policy and new policy, a replacement might not be worth it. The small price difference won’t justify losing the time spent satisfying the contestability period. Also, a replacement means you’ll be cancelling the old policy, and there is a time investment with that process (granted its not a huge investment of time). Be wary of agents pushing for a replacement when both policies are of the same type and similar price. Agents typically receive more commission by doing replacements instead of extra policies.

Are you protected from bad replacements? Yes, the insurance industry has put some safeguards in place. One safeguard is a free-look period in which a replacement can be rescinded and a full refund issued on the new policy that was purchased. The agent is also required to give you literature that helps you be more informed about replacements. Below is a sample replacement form that is used for all replacements in the state of Texas.

First page of standardized replacement form used in Texas
standardized replacement form used in Texas – page 1
Second page of standardized replacement form used in Texas
standardized replacement form used in Texas – page 2

Best Whole Life Insurance

This article disputes what other authors say are the best whole life insurance companies. Learn why their list of best companies is flawed.

I have to admit I’m jealous of other websites that are given clout and authority by search engines despite their terrible advice. These websites don’t deserve the clout and authority given to them. One whole life insurance article touted New York Life and State Farm as two of the best life insurance companies. I will dispute this assertion.

New York Life has a particular life insurance product that is sold to seniors. This product is ridiculed by hundreds if not thousands of independent agents. Here is what makes it so bad: premiums increase every five years and the policy automatically cancels at age 80. So even if seniors on a fixed income can somehow afford the premium increases, the policy cancels just a year after their life expectancy. Yes, the policy is convertible to a permanent policy, but I suspect the vast majority of policyowners don’t attempt conversion until age 79, when they are greeted with an unpleasantly high conversion quote. What might not be explained well is the way conversion rates are calculated; they are based on the age of the insured at the time of conversion. Nearly everyone trying to get a permanent policy in their late 70’s or early 80’s will have to pick their jaw off the floor after reading the quotes. Seniors are much better off buying simplified issue whole life, where the premiums never change and the policy never cancels (as long as premiums are paid).

State Farm has many good things going for them, but competitive life insurance rates is not one of them. State Farm is well known for having some of the highest life insurance rates on the market. State Farm does have an impressive reputation for never missing a dividend payment, but I suspect that can be attributed to overpriced premiums. If companies charge too much in premiums, they will always have enough money to pay dividends. Non-participating policies (no dividend payments) seem to be the norm for companies with competitive premiums.