A New Low in Insurance?

[Telly]

I still have term life insurance via a professional organization. Every few months they send me some new insurance product idea. I flip through it, then throw it away, not interested.

The latest is Group Term Life with Living Benefits. If you (or your spouse, if you insure them too) develop one or more certain "conditions", you can, at your request, and if the insurance co. agrees, pull forward part of the death benefit while you are still living. It is underwritten by New York Life. I'm not interested.

But in flipping through the papers, I looked at the request form. I was shocked at the last question in the Statement of Health area:

Has any person proposed for insurance had a parent, brother or sister who, prior to age 60, had been medically diagnosed by a physician as having, or been treated for: cancer, a stroke, paralysis, hypertension, diabetes, heart disease, kidney disease, neuromuscular or mental illness?

I have never seen such a wide-sweeping dragnet ever before!
Maybe somewhere there's an orphan that would do ok...

"New York Life... It's the Company You Keep" nuh-uh, not me. Throw the suckers back!

 

[dgoldenz]

This is just a term life policy with a critical illness rider. Being from NYL, it's a really expensive term policy. Many companies have similar offerings, but depending on the cost, most would be better off buying a separate critical illness policy if they really want it so that they aren't taking away part of the death benefit. Almost every life insurance company offers an "accelerated benefit rider" for free that allows you to pull part of the proceeds if diagnosed with a terminal illness and life expectancy of 12 months or less.

Just because the answer to the question you posted is "yes" does not necessarily mean that you would be disqualified. I'd be amazed if someone had a family where nobody has ever been treated for hypertension.

 

[ziggy29]

Has any person proposed for insurance had a parent, brother or sister who, prior to age 60, had been medically diagnosed by a physician as having, or been treated for: cancer, a stroke, paralysis, hypertension, diabetes, heart disease, kidney disease, neuromuscular or mental illness?

Well, the criminal justice system won't hold you accountable for the sins of your relatives, and the financial system won't hold you responsible for their debts (unless you co-signed). But the insurance industry can and will hold you responsible for the health of your relatives. Think about it: In what other industry is gender and age discrimination legal and even expected?

 

[IndependentlyPoor]

I was adopted as an infant and often wonder about such questions. Suppose your adoptive family has a history of such inheritable diseases but you answer "no" in the application then fall ill with one of those diseases. Would the insurance company try to deny your claim and/or cancel your policy based on a fraudulent application?

OTOH if you make it clear to the company that you have no knowledge of your biological family, how would they assign the risk - put you in the high risk or low risk pools?

 

[ziggy29]

OTOH if you make it clear to the company that you have no knowledge of your biological family, how would they assign the risk - put you in the high risk or low risk pools?

Let's put it this way: If you were a lender and the prospective borrower couldn't document their income or employment, would you charge a higher or lower interest rate?

 

[IndependentlyPoor]

Let's put it this way: If you were a lender and the prospective borrower couldn't document their income or employment, would you charge a higher or lower interest rate?

Good question, and that was just what I was getting at. I suspect the insurance market is very inefficient. You would think that an insurance company that offered rates lower than those for high risk (rates based on the average of the whole population) to adoptees with no family medical history would sell more policies and make more money than those who charge the max. Somehow I don't think it works that way.

 

[Katsmeow]

I was adopted as an infant and often wonder about such questions. Suppose your adoptive family has a history of such inheritable diseases but you answer "no" in the application then fall ill with one of those diseases. Would the insurance company try to deny your claim and/or cancel your policy based on a fraudulent application?

As an adoptee it always amazes me on online questionnaires that there is never an option for lack of knowledge on family medical history. I even know people who aren't adopted who don't have detailed medical history for biological family.

In my case on any form that I fill out where I can write in I usually put that I am adopted and have limited medical history. I used to write unknown but I actually found my birthmother 13 years ago so I now have some medical history on that side of the family but have zero on the birthfather side.

 

[dgoldenz]

Let's put it this way: If you were a lender and the prospective borrower couldn't document their income or employment, would you charge a higher or lower interest rate?

Insurance is different. If you are adopted or really have no knowledge, they do not hold it against you. You just need to explain why.