Term Life Insurance Articles
Guaranteed Insurability And Terminal Illnesses In Term Life Insurance
2010-06-07
The age does not matter - when an individual is diagnosed with a terminal illness, the news is heartbreaking. It means a re-assessment of priorities and plans, and can result in a stronger and more determined individual, or one who has given up all hope. In many cases, those who have been diagnosed and their families never consider the possibility that term life insurance could still be an option for someone with a terminal illness, much less a policy that is guaranteed to be renewed. While these policies are not always common, it is possible to find a form of term life insurance even for those whose life will inevitably end short of its natural timeline.
A diagnosis of a terminal illness simply carries greater risk for an insurance company. Depending on the nature of the illness and the potential time left, this risk may be well within their acceptable limits, and it may be possible to reach an agreement for term life insurance. While the premiums for this insurance will naturally be higher than for a non-terminal individual, they can still be worth the cost. As well, the length of the term will likely be shorter. From an insurance perspective, they will attempt to pick a term length during which the insured will not pass away, thus limiting the amount they have to pay. For an insured, it is important to ask about guaranteed insurability.
What this means is that even for a year-to-year contract, the insurance company will not be able to drop the insured for any reason outside of insurance fraud or other criminal activities, or the non-payment of premiums. It may be possible to re-negotiate the rate of premiums paid, but only if the premiums are re-vamped for the entire class of policyholders. This guaranteed insurability is typically only offered in small amounts, for example three or five years, but can be of great benefit to a terminally ill client. Should their illness take a turn for the worse in the second year of the policy, the insurer will be obligated to renew the third year of the term, even if the customer is nearing the end of their life. Guaranteed insurability can help to ensure that the client and their family receive the maximum benefit from a term life policy without fearing that they may be dropped.
While a terminal illness diagnosis can be crushing, it does not have to mean that a patient's family will be left without resources. A respected term life insurance company will be able to find an insurance quote for a terminally ill client, and guaranteed insurability will make sure that the policy is kept in force for the longest possible period.
