When you pay for a life insurance policy, you expect it to take care of your family after death. Last week, I told you about post claims underwriting which is a legal way for an insurance company to avoid paying a policy if death occurs within two years of the policy's effective date. When an insured person dies within two years, the insurance company gets all the old medical records and examines them closely to see if the insured person ever had a condition that, if disclosed to the insurance company in the application, would have enabled it to ask for more premium. If so, our law permits it to deny making payment to the deceased person's family. The condition doesn't even have to be life threatening.
Many people aren't sophisticated enough in medical matters to realize if they've had some conditions asked about, and the life insurance agents, who read the application's questions to a customer and fill in the blanks, often don't want to explore the past medical history in depth. Finding out about past medical problems is against their financial interest. They want to sell the policy and move to the next customer's house to sell another.
Here are some ways to guard against this problem and to better ensure that your life insurance policy will insure you if you die within those critical first two years of the policy.
As a beginning, don't trust the life insurance companies and their agents. Insist on reading the application, and fill it out yourself. An agent hurrying to make a sale isn't as interested in accuracy as you are. I won't let one of them fill out my insurance application. Second, some companies offer online insurance products. Buying online is okay, but read the application slowly and carefully before clicking the mouse. Consumers click a mouse to answer several questions containing multiple health issues, sometimes not reading carefully.
So if multiple ailments are included in a single question, and one is overlooked, it's easy to buy a policy that upon death isn't going to pay. Third, consider keeping your own medical history by jotting down in a notebook or on a computer list every visit you make to a doctor or hospital, when you went, and what the visit was for. Give a copy of it to the insurance agent, and insist it be attached to the application and made a part of it. When your policy is issued, if the history was included, you'll see it attached to your application which is a part of the policy that you'll receive. If it's not there, the agent didn't do his or her job. Call the agent immediately, and by using firm language, get the problem fixed.
If you'll do these things, you will have gone a long way toward protecting your family from the insurance company that cares only about making a profit.