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Nov 5 2011 12:38PM
Joint life insurance and disclosing medical conditions

Question:Our household has been running on a double income for years, allowing us to save some money for the future. A few weeks ago, however, my wife was diagnosed with cancer and she has decided to quit her job. Strangely enough, a few weeks before we had to go through this emotional turmoil, I decided to apply for joint life insurance for my wife and myself.I am now unsure if my application will be denied due to my wifes medical condition. What are your thoughts? Answer: Hearing this news can be extremely tough, and it certainly does not make things easier knowing that your wife s condition may impact your familys security financially as well as emotionally.Joint life insurance would usually be the solution offered for double-income families such as yours.As with any type of insurance, there is a clear pre-contractual duty of disclosure based on the utmost good faith of the applicant to disclose anything that may have an effect on the underwriting of the insurance policy. Given that your application was made before your wifes cancer diagnosis, you must inform the insurance company of your wifes condition and the fact she has decided to quit her job.This disclosure is time-sensitive but it should happen as soon as is reasonably possible. Your joint life insurance application will be affected in two ways. As your wife has been diagnosed with cancer, her condition will materially affect the underwriting of this policy. The insurance company may refuse to provide life cover or may attach a special condition to it,for example, a rating or exclusion. Secondly, as your wife has ceased her employment, you are no longer a double-income family and, therefore, it might be more difficult to justify a joint life insurance policy. This is not to say that as a housewife, your wife cannot get life insurance. It is just that, depending on your circumstances and the policy terms and conditions, a cap might be applied.On a separate note, depending on the insurance company and the type of policy that you have applied for, you may have been provided with an interim life cover. You will need to check if your policy has this feature. In any case, interim cover is usually restricted to death benefit and so would not help in this instance. Most insurance policies providing critical illness cover have a waiting period of around six months before that benefit becomes payable. Therefore, had the policy already been issued and had you completed the relevant waiting period, a joint life insurance policy, including critical illness benefit would have made a payout. This would be with respect to the critical illness, as well as another payout upon death, subject to the level of remaining life cover. Please note that the type of insurance policy described above is meant to replace income or provide a lump sum payment upon death. Your wifes medical expenses for treatment should be covered by your medical insurance policy. On a positive note, once your wife recovers following her successful treatment, you might be able to obtain appropriate insurance coverage for her. This is a difficult time for your entire family, but rest assured there are plenty of other options allowing you to secure your familys future. Taking life insurance is just one of them.In any event, you should explore your options before making any decisions and seek the advice of an independent financial adviser to figure out the best course of action. Remember,insurance is something you buy before you need it, so take action before it is too late.
 
 
 
 
 
 
 
 
 
     
 
     
 
 
 
 
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