by Guest » Thu Jan 31, 2013 10:25 pm
Is it strange for one company (USAA - former service) to ask you to list every doctor you ever visited and a long list of questions about past habits et cetera and to give you a very thorough exam and another company (Mutual) to barely ask any for the same amount of coverage (500K). Obviously I don't mind but I want to make sure nothing is being misrepresented or omitted that would cause the claim to not be paid down the road - but the examiner blew off my asthma and barely asked anything else.
I am 38 good health, minor drug use waaaaay back but nothing on record.
I am 38 good health, minor drug use waaaaay back but nothing on record.
Posted: Fri Feb 01, 2013 07:32 pm Post Subject:
Insurance companies are free to inquire about anything and in as much detail as they choose, provided there is no discrimination made or intended. Misrepresentation remains a concern in either case.
Posted: Fri Feb 01, 2013 07:39 pm Post Subject:
Thx for reply. I was more than willing to answer all questions - I had already done so once, they just never came up - never even weighed me, just took my word for it.
Guess we'll see when the rates come back...
Posted: Fri Feb 01, 2013 08:28 pm Post Subject:
they just never came up - never even weighed me, just took my word for it.
In the world of insurance, this is something known as "UTMOST GOOD FAITH". The insurance company relies on you to provide accurate information, and you rely on them to do the same.
Problems later surface when it becomes evident that one side or the other failed to uphold their end of the "good faith" by supplying misinformation.
From the insurance company's/agent's side, the misinformation can involve things such as implying that the premiums for a policy will "vanish" after a certain number of years (based on nonguaranteed things like the cost of insurance and dividends or interest credits). Or blatantly asserting that the policy covers certain things that would be of great importance to the policyowner/insured when, in fact, the policy does not (such as misrepresenting an accidental death benefit contract as life insurance).
Another problem may occur when the agent doesn't want the client to know he/she has been rated substandard and tells them that a mistake was made in calculating the premium, which is why the actual premium is higher than originally quoted. Fortunately, this is a rare occurrence.
From the policyowner's/insured's side, the failure involves concealment of facts the insurer should know or misrepresentation of those facts (such as a recent diagnosis of cancer, or having been advised to undergo a critical medical procedure, use of tobacco products or misuse of drugs or alcohol). Height and weight are important issues, but as agents we don't carry scales or tape measures with us. But if a person obviously does not seem to match their "self-report", we may question them about it, ask them to bring out the bathroom scale or stand next to something whose height is well known (such as a standard door frame which is 78" to 80" tall, and door knobs are at about 30" to 32" from the floor) for purposes of comparison.
Even when they don't ask the questions initially, insurance companies have two years under the laws of most states (one year in a few) to conduct more extensive underwriting inquiry -- even after a death occurs -- to determine whether there was any misrepresentation or deceit (sometimes an imposter has been substituted in the guise of the insured in order to trick the company into issuing the insurance) in the application that would have changed the insurance company's decision to issue the policy on Day One. In such instances, the insurance company may properly "rescind" the contract, refund all premiums paid, and avoid the death claim.
For the policyowner/insured, the limitation under state law, known as the "period of contestability", prevents the insurance company from avoiding a death claim after the two year period. At that point, the policy becomes "incontestable" based on answers in the application -- with only a few exceptions surviving the period of contestability. A situation involving an imposter is one, lack of insurable interest is another. And in some states, "fraudulent misrepresentation" (done with bad intent, as opposed to an innocent error) also escapes the "incontestability provision" required in the contract.
Lying about one's age or gender also escapes the "incontestability provision", but it does not allow the insurance company to void the policy -- instead, the insurance company merely adjusts the benefit based on the correct information in light of the premiums that had been paid. In most cases it means the beneficiary gets slightly less money, but it can work the other way, too, and result in the insurance company having to pay slightly more than the face amount of the policy.
Life insurance is a product that most people believe operates under the premise: You pay . . . you die . . . they pay. However, the more complex policies known as universal life insurance (traditional, indexed, and variable) do not operate quite as obvious as that. There are a number of underlying factors that can cause a UL policy to collapse before the insured dies, even though the "planned premium" has been faithfully paid in all months/years.
That, too, can become the source of a BAD FAITH action against an insurance company and its agents. That's where I come in, analyze the situation, and provide expert witness services for the policyowner's attorney when it is apparent that some form of misrepresentation occurred in the beginning.
Posted: Fri Feb 01, 2013 08:54 pm Post Subject:
In the end, I want a claim that pays - which is why I have been up front and honest about past issues when asked, because I mentioned them to a doctor once or twice (as an aside - never treated for anything. I guess my question is: failing to answer a question that's not asked isn't concealment, correct?
I trust my agent who is shopping me for non USAA coverage and will read everything carefully twice, and I know more or less the laws in Florida. The difference in the two exams was just a little disconcerting, because I think I will get better rates from non-USAA carriers, and they're the ones not asking the questions!
Posted: Sat Feb 02, 2013 12:04 am Post Subject:
failing to answer a question that's not asked isn't concealment, correct?
Actually, it can be under certain circumstances. A definition of concealment is: Failure to communicate known information that ought to be communicated because it would affect a person's decision to enter into a contract.
For example, an insurance application question could be worded: Have you ever been treated for cancer? Today, your answer is NO, but tomorrow is your first scheduled round of chemotherapy.. That's the kind of information that could be considered a concealment.
You cannot conceal what you do not know. A person might be experiencing occasional headaches, reduces the discomfort with Tylenol or Motrin, and goes about their business until they have a fainting episode and are diagnosed with a brain tumor the size of a baseball. Two weeks prior to this the person applies for life insurance and answers NO to the question: Have you ever been diagnosed with, treated for, or advised to have any procedure related to cancer or tumors of the head, neck, skin, lungs, internal organs, or lymph nodes? Two weeks after the policy is issued, he dies as the result of the tumor.
The insurance company is likely to deny the claim initially, but when pressed to admit that the first diagnosis was made two weeks after the application for life insurance was made, and at the time the policy was delivered, the were no questions asked about the insured's health status.
That is not a concealment. Instead, it would be "information about which communication was waived" by the insurance company, and all states have adopted legislation that makes such information exempt from disclosure.
What exactly are you looking for in a life insurance policy? Maximum coverage for a limited period of time with no cash accumulation (Term Life), a fixed death benefit with guaranteed cash accumulation (Whole Life), or something that sort of looks like term insurance as far as cost is concerned but has some kind of cash accumulation like whole life (Universal Life, Indexed Universal Life), or something like term life but with cash accumulation tied to stock market investments (Variable Universal Life)?
Each of these forms of insurance have both advantages and disadvantages. You would want to know about the disadvantages more than the advantages, because it's the disadvantages that lead to product failure in advance of a potential claim.
I think I will get better rates from non-USAA carriers, and they're the ones not asking the questions!
So is your concern about USAA's ability to pay claims or their motivation for not asking many questions?USAA only does business with a small group of persons . . . members of the military (past and present), and their immediate family members. I did not serve in the military, but my son is in the Marine Corps. He can obtain insurance through USAA, but I cannot. His daughters could obtain insurance through USAA, but I cannot.
USAA knows things about its potential base of insureds which distinguish them from the general population, and could, in turn, reduce the need to ask certain questions for underwriting purposes. Understand that the more time and expense a company incurs during underwriting must be made up by raising rates.
In life insurance, you don't always get what you pay for. But paying less can be a better solution than paying more unnecessarily.
Posted: Sat Feb 02, 2013 12:24 am Post Subject:
Term life - not income replacement. I was unclear - USAA asked me and my husband every question under the sun - the other companies didn't. When I mentioned asthma, which is in fact pretty mild, the paramedic didn't even write it down. Perhaps when they see my doctor's records they'll confirm it - but it was just much less intense than USAA. And if I smoked a little grass a while back, I copped to that with USAA because maybe might have I mentioned it casually to my doctor and didn't want to ever jeopardize the claim being paid down the road. The other two companies never even asked. I guess I was just surprised. I want the policy to pay if something happens to me, same for husband, but he's got no worries because he was in the service a lot longer and therefore a TOTAL SQUARE .
I think I'm fine, just being a little paranoid. I don't have much to hide, again just surprised.
Posted: Sat Feb 02, 2013 01:20 am Post Subject:
just being a little paranoid
LOL! Everything should go well. If you are looking for 20 year term, expect to pay about $30 per month for $500,000 (if a tobacco user, then the cost will probably be in the $50-$60 range).
Ten-year term will be a bit less costly for the first 10 years, and a lot more costly after that (because you'll be close to age 50 then). Thirty-year term would be more costly than the 20-year premium, but less over thirty years compared to the 20-years plus ten more renewal years after the 20 years run out.
The main thing to watch for with term insurance is that the words LEVEL TERM refer only to the death benefit, not the premium. Some 20-year level term policies do not have level premiums for 20 years, and you could be surprised by premiums that triple or more after the first ten years and continue to go up every year after that. Unless the policy specifically states LEVEL PREMIUM PERIOD 20 YEARS, it may not be a true level premium policy, so be sure to look at the premium "ledger page" to know what happens to the premium every year. I've seen $200 per year premiums suddenly increase to $2000 in year 11 of a 20-year term policy. You don't want that kind of surprise.
Posted: Mon Feb 04, 2013 04:03 pm Post Subject:
When I mentioned asthma, which is in fact pretty mild, the paramedic didn't even write it down.
This can be problematic. It sounds like the person asking the medical questions wasn't being completely honest by not including the information. However, you are also guilty. You most likely signed the Part II (the part of the application with the medical questions) claiming that the answers were correct to the best of your knowledge despite it saying "no" to asthma. This can be an issue if you accept the policy and die within 2 years.
Posted: Mon Feb 04, 2013 06:37 pm Post Subject:
You most likely signed the Part II (the part of the application with the medical questions) claiming that the answers were correct to the best of your knowledge despite it saying "no" to asthma.
I'm not so sure this was the case, as the OP stated it was the paramed who may have written down the wrong information. We have no information about what was or was not attested to in the actual life app.It's quite possible that the paramed answered "Yes" to the asthma question, too, but did not indicate it was of any special concern, leading the OP to believe it was being "blown off" by the paramed. The essential details are lacking. If, however, the answers in the application and in the paramed report are at odds with a person's true medical status, it can be a problem during those two years of contestability.
Posted: Mon Feb 04, 2013 08:23 pm Post Subject:
I called my agent and he confirmed as much, that what I mentioned didn't warrant inclusion based on ratings, or something. It was treated by a doctor, so clearly they'll find out. Thanks for your help.
Add your comment