As you fill out that life insurance application, what if you choose to leave off pertinent information about your past or current health? Could the medical decisions you make in the future inadvertently void the life insurance policy you purchase today?
How to buy life insurance
These are questions that may have crossed your mind if you’ve had a serious illness or condition such as sleep apnea or cancer; or if you avoid mainstream medicine in favor of alternative treatments, reject medical treatment as a tenet of your religion or refuse treatment for a potentially life-threatening issue.
Lying on your life insurance application is one thing; it can void your policy. But once the ink dries on your life insurance policy, in most cases, you’re covered under the terms of your contract, regardless of the health care decisions you make going forward.
“If you have your policy in place and you’ve been paying for your policy, the changes in health that you have going forward would not be material,” says Jacki Goldstein, vice president and chief medical officer for MetLife in New York.
You’re covered, no matter what
Dr. Robert Pokorski, chief medical strategist for The Hartford’s Individual Life Insurance Division in Woodbury, Minn., agrees. “You will still be covered no matter what you do. Somebody may have high blood pressure and after a period of time stop taking their medicine. Even if you stop, your insurance continues. If your doctor recommends surgery for cancer, some people say no. We will still pay the claim when it occurs.”
That said, you could endanger your policy before it’s written based on the information you disclose — or fail to disclose — on your life insurance application.
“The only thing, generally, that can void a life insurance policy is fraud on the medical application,” says Rick Nathanson, Seattle-based insurance expert and author of “Can You Afford to Grow Old?”
Attempts to defraud
According to Pokorski, most standard life insurance policies include a two-year contestable period during which the insurance company can rescind a policy if you lied on your application through misrepresentation or fraud.
“Misrepresentation means that you omitted something that is pertinent to the risk, such as you had cancer and you didn’t tell the insurance company,” Pokorski says. “Fraud is more of a contractual attempt to defraud the company. If the death claim occurs within that two-year period, the company may choose to rescind the policy and not pay the claim.”
Goldstein says life insurers realize there are gray areas when it comes to an applicant’s medical history. “Some people know a little bit more about their history, and there are some answers that aren’t quite black and white,” she says. “As long as there was no intent to deceive, that policy is in place and what happens in the future does not matter. It would not affect that policy.”
After you’ve used a life insurance calculator and then move forward with purchasing a policy, what’s often overlooked or soon forgotten among the pages of legalese is that positive changes in your health can convince your insurance company to lower your premiums. The only catch: You must remember to request a policy review.
“If you took out a policy in the middle of a health situation where you did not qualify for a best rating, those ratings can always be reconsidered for a more favorable one in the future,” says Goldstein.
“We might have clients with high blood pressure that was not really well controlled and they have a standard rating. But over a period of time — and different carriers have different time periods such as six months or a year — if they can show that their blood pressure is better controlled, they can actually come in and be reconsidered for a better rate,” she says.
Kick the habit
Smokers in particular stand to save on their life insurance premium if they kick the habit.
“If someone is a smoker, he’s going to get smoker rates,” Goldstein says. “If he subsequently stops smoking and meets the qualifications of his carrier in terms of how many years qualify him to be a nonsmoker, that smoker status can be reconsidered and removed.”
The same may be true if your life insurance policy was underwritten in your wild years. If you’ve long ago given up hang gliding, scuba diving and spelunking, it’s time to give your agent a call.
“If your policy is five years old, it needs to be reviewed and very likely updated,” says Pokorski. “The products in the insurance industry keep getting better and better. Sometimes, the rates have actually gone down, believe it or not, because life expectancy keeps improving. A lot of times there are features that did not exist at the time they bought their policy.”
When you lie on a life insurance application, all bets are off. But if you’ve been honest and forthcoming, you can rest assured that your policy will be honored upon your passing.
“If you forgot something on the application that is relatively inconsequential in the past, in general, companies would not hold that against you,” Pokorski says.