As
you're going through the term life
insurance application, you'll notice
lots of questions that have to do with
certain dangerous hobbies such as
skydiving or scuba diving. Now you may
thing these are no more dangerous than
driving a car (and you might be right)
but the life insurance carriers tend to
be more of the conservative and bow-tie
wearing sort so they're apt to
disagree. in fact, all kinds of things
can change in life such as starting to
smoke or just falling into bad health.
Some things we can't control while
others, we can. What happens say if we
adopt a "dangerous" past-time after
submitting a term life insurance and
even being approved? Good question.
Let's take a look and be conservative in
our take on it to protect you.
Let's
take a fictitious Bob as an example.
Bob's in good health and does not have
any extravagant hobbies. He applies for
and is approved with term life insurance
at the best tier since he's in perfect
health. Five years later, he goes
through a mid-life crisis after losing
some hair and he aggressively takes on
the sport of skydiving. He's flinging
himself out of planes every weekend in a
bid to push back Father time. So how
does his new hobby and the resulting
shoulder tattoo affect his term life
insurance eligibility? Can the carrier
cancel his coverage now that he's
adopted skydiving as a passion? All
good questions.
For
first point of advice is this. Answer
the questions honestly and completely at
the time of underwriting for your term
life insurance policy. In Bob's case,
he had no intention of skydiving when
going through the underwriting policy.
He could honestly say "no" to those
questions. This is different of course
from intending to skydive and just not
putting it on the application. Again,
to protect yourself, answer honestly up
front. It's penny wise and pound
foolish to save on term life premium by
hiding information and then not having
the policy pay out because you hid
information on the application. That
doesn't make any sense and yet it
happens all the time. Don't give the
life insurance carriers a way not to pay
by concealing information. Back to our
situation with Bob, he didn't not
skydive at the time of completing the
application so he was honest in saying
no. The fact that he took up the sport
5 years later does not change that fact
as the life insurance carrier was able
to underwrite based on correct
information at the time of application.
What about if something happens when he
is skydiving?
This
is tricky and to some extent, you want
to be conservative. The carrier might
pay out according to the benefits
providing you were honest on the
application. They will probably check
to see if you have actually been
skydiving all along. To be very
conservative, assume that they not pay
out for the skydiving situation. They
might but if I were a betting man, there
is probably a clause which offsets
paying benefits for extreme or dangerous
activities somewhere deep in the
policy. If anything, you may have to
fight for payment of a claim resulting
from skydiving or like-minded
activities. Again, the key concern is
to be accurate on the application and
during the underwriting process.
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