Life Insurance Question with a little twist...

Here’s the deal: On a Thursday night back in December of last year, my wife goes to the emergency room for some pain. Pain is remediated late Friday morning and the cause is rare but not unheard of, but they performed a biopsy just in case.

Saturday, I applied for supplemental life insurance at work on my wife with me as the beneficiary, because the enrollment period is ending. I bugged her to fill it out, but I’m tired of putting this off for another year (Two years previously, HR never informed me that your benefits are automatically reset to minimum at the beginning of the new enrollment year; I thought they would remain the same :mad: ).

I turn in the paperwork five days later (on a Thursday) to the HR people. An hour later (I’m not making this up), I get a call from my wife who tells me the biopsy is positive for cancer (which is later diagnosed as Stage I) :eek: .

At that point the scare, the worry, the cost, the travel, etc. push that out of my mind (the tumor was excised cleanly; she’s now doing a chemo protocol to see if it will reduce the current reoccurrence rate of 40% for Stage I–all things considered she’s doing as well as one could hope for).

I later find out the odds for this cancer are like 1 in 150,000 per year for woman in general in the US. When things calmed down, I also realized that I’m pretty much screwed on having that life insurance policy being issued to me. I can’t help but feel this is like winning a Mega-macabre lottery. I mean what are the odds of these two events conspiring? And for the record, I’ve been very anal retentive about keeping up with this stuff–and yet the one time I didn’t … :frowning:

Yesterday, the life insurance company called and wanted to give my wife a “physical exam” and that she had been “randomly selected.” :rolleyes: Yeah, like a hospital bill for $64,000 isn’t going to pop off a few distress flares in the insurance database system. That really annoyed me, because I’d assumed that they decided not to issue a policy for obvious reasons. So I suppose this “random” exam is a way of covering their legal butts.

But, now it got me to thinking in a more academic mode: unless one is explicitly asked, should one mention the change in one’s health (i.e., cancer) after the application is mailed, but before the policy is issued? Is that insurance fraud? Or is it being prudent? Or is it ethical? Normally, I would just as well tell them–life happens. On the other hand, is this a case where you should only provide the information they request–no more, no less? It would strike me that some in the insurance industry would be more than happy to avoid paying out on a policy as a result of somebody’s big mouth. In other words, does the consumer have rights in this area (which is NC by the way)?

My wife said she believes that we should mention this up front before the exam. ("…Ms. user_hostile, we notice a little bit of Docetaxel in your blood sample–have you been chewing on the bark of a Pacific Yew the last few days?"). It’s been a moot point for me since I got that phone call. Who’s going to believe me? Except, of course, for those out there in the Doper community.

Insurance laws vary from state to state, I’m not your insurance guy, yaddayaddayadda

If the life insurance is part of a group plan (common for employee benefits packages) then insurability isn’t even questioned. However, because they’re asking to do a physical as a condition for policy issuance, then it sounds like this is not the sort of plan you’ve got.

In general as long as you have been honest on the application then the policy should issue as applied for. During the underwriting period you need to be truthful when asked, but are not under any obligation to contact the insurance company and say, “Oh by the way, this came up after the application was submitted…” When they do the physical, a lot of the health questions get asked again–you’ll need to out with the truth at that time. It’s best if you’re honest and fully truthful (don’t lie by omission) throughout the underwriting process because there’s this little thing called a contestability period.

The contestability period, usually one or two years as allowed by your state, is a period of time for the insurer to look closely at the cause of death and decide if the cause is excluded (suicide, for example). Should the policy issue as applied for, and then Mr. Cancer takes your wife during this period, the insurer has the right to review her medical records to see if the cancer was an issue which should have been disclosed in the application. Once you’re past the contestability period you can die in whatever way you think is best for you.

Hate to disagree with an insurance pro (if memory serves, that’s what you do) but with some employee group plans, insurability is questioned. My company sold its IT division to another company and I had to apply for coverage under the new employer’s plan. They had the short questionnaire that, if any answer was “yes” (have you ever had cancer, been treated for blood pressure etc.), meant you had to fill out the really long version. I was declined because, on the long questionnaire, I had to disclose my weight (grrr though it did serve as an incentive for me to pull some off, reapply, and get coverate).

Re the OP: I would not volunteer anything about the cancer. Let them ask. The one thing that I’d wonder about is on the application, was there anything about “have you seen a doctor or been hospitalized within the last two decades?”. Since you filled out the paperwork after the ER visit (if I’m following correctly), that may be their “in” for exploring your wife’s medical condition further. If the paperwork had been mailed before the ER visit, then (I think) that would be a very different situation.

I am sorry to hear of your very stressful and worrying situation.

In Canada (and the laws about life insurance have always been very similar when I checked between Canada and the US) the insurance company has a right to know about any changes in health untill the moment policy is delivered and accepted. Policies are incontestable for misrepresentation after two years, but never for fraud. My interpretation would be that a non-disclosure this serious would be fought as a fraud. Oh, and IANAL.

Supplemental life insurance under a group policy is not always an automatic issue. Most times it carries a simplified medical form. If however there is any indications of a problem, I believe that the company reserves the right to request a medical. The companies action in the OP would tend to bear this out.
Now unlike personal life insurance, no binder was paid with the application, so no coverage is in effect until the insurance company says there is. Most likely when your wife’s recent medical history comes out, she will be declined.
If it had been a personal life policy dated before she went to the hospital, and with a binder (first premium paid) she would be covered.

Thanks Rick & Mama, Didn’t know that.

If during the underwriting process the company gets a look at medical records which include a declinable condition that arose after the application, can that be used to decline the app? And of course once an application is declined the binder expires as well, right?

It’s been too long, I’m forgetting the life insurance details.

It has been a long damn time for me also. IIRC if the applicant paid the premium and passed the medical (if required) they are covered. Period. If it was a policy that was under the medical limits, and the application showed no problems and they died, no problem.
Either way, you can bet that if the insured dies right away they will look at it a second time to make sure all of the questions were answered truthfully.

It can also depend on how much coverage you request. When I worked for Nationwide Insurance many years ago, you could get coverage from 1 to 3 times your annual salary in half increments. At 1 times salary it was automatic coverage or if you increased by a half. (like from 2 to 2 1/2 times salary) If you wanted to start at higher than that or increase by more then there was a health review and you could be denied.

Oy. I haven’t thought about the details of life insurance since I got my California license…but if I recall correctly a policy can be cancelled up to 2 years from date of issue for material misrepresentation, which I think does include conditions that come up before the policy is actually written. After that the policy can only be cancelled for non-payment.

Aye, there’s the rub. It was after the ER exam, but before I was informed of the cancer. Even though I dropped off the paperwork (via interoffice mail–you know the one that doesn’t include a postmark), it didn’t get mailed for another two weeks as I understand it. And your right about the latter situation, had I completed a week before the ER visit, I would be raising hell about it.

Bingo. I had raised mine because I’ve had to start over on retirement savings, and her demise would result in some debts that I would incur paying, not her. I had raised her payout to me up to 2 1/2 x salary.

In this time, I have yet to be charged a premium (via payroll deduction). So I’m screwed…

Well, the simple and obvious solution is for Mrs Hostile to not die (ya hear that, Mrs. H??? You have your marching orders!!!). Seriously, here’s hoping that chemo protocol does its job nicely and has her ordering you around for many decades to come. Stage 1 sounds waaaaay better than it could have been.