What to do when you can't get life insurance?

[LRAO]

So I was trying to help my friend out in getting in financial life in order. I suggested the basics:

1. LBYM
2. Max out the Roth
3. Max out the 401(k)
4. Keep 3-month living expenses in cash
5. Get a term life insurance policy (as he is married, owns a house, and has a kid on the way).

BUT...it turns out he has a congenital heart condition that the puts him, according to the underwriters, as "uninsurable."

Suggestions #1-4 are what I have read over and over again here and on Morningstar's VG Diehards...but #5 kind of took me by surprise.

I should be grateful for my "insurable" status...

but as for my friend, where does he go now?

[brewer12345]

That's a tough one. I guess I would give it another try, particularly with an agent that has experience placing touch cases. Barring that, there are insurers that will underwrite high risk life insurance (USFL, among others), but they charge so much for the "coverage" that you'd probably be better off just putting the money away in investments.

I think that if he really cannot get life insurance (aside from the high risk stuff of dubious value), it just puts more emphasis on steps 1 through 4. It also suggests that he should be living each day richly...

[Rich_in_Tampa]

Does he belong to some group, trade association, or other entity which offers group life without individual underwriting? If not, perhaps you can help him find one.

[justin]

remind him of the Social Security Survivor's benefits his survivors will receive. They pay a hefty sum to surviving children up to age 18 and spouses who care for children. The amount of the benefits in my personal situation would be over $2000/month. It won't cover everything but will go a long way towards putting food on the table and paying the mortgage.

[bongo2]

Everyone with a life expectancy over a couple of years can get life insurance, but some people will have to pay dearly. *This leads to an interesting question - at what price should he not buy the insurance? *On the one hand, the more it costs the less it benefits his family, on the other, the more it costs the more they need it.

If he truly can't get it (or the cost is out of reach), then he should pay attention to step #6 - make out a will. *He may also want to look into group policies through work or otherwise as Tampa mentions.

[brewer12345]

Originally Posted by bongo2

If he truly can't get it (or the cost is out of reach), then he should pay attention to step #6 - make out a will. *He may also want to look into group policies through work or otherwise as Tampa mentions.

Regardless of whether he can or cannot get life insurance, he should definately have his estate planned out, with a will and anything else appropriate.

[FinanceDude]

Originally Posted by brewer12345

Regardless of whether he can or cannot get life insurance, he should definately have his estate planned out, with a will and anything else appropriate.

Agree...............I can personally tell you what a mess it is for a SINGLE person, much less a married one with children.

High risk insurance tends to be a ripoff..............the companies crush you on the rates................they can make whole life look cheap..............

Have him check at work........many companies have group term that you can buy through payroll deduction.* The company usually subsidized part of the premium, and some companies let you buy up to 5X salary without evidence of insurability.

Good luck..............

[astromeria]

I might also (with some trepidation-) add that if his wife isn't prepared for a decent-paying job that she enjoys, that she take the trouble to become so. Just in case.

And I hope he beats the odds!

[FinanceDude]

Originally Posted by astromeria

I might also (with some trepidation-) add that if his wife isn't prepared for a decent-paying job that she enjoys, that she take the trouble to become so. Just in case.

And I hope he beats the odds!

I'm hoping that's not the case...........it would be tough for the kids to lose their dad, and then "lose their mother" to the workforce. Or, force her to marry another for financial security............also not a good idea...................