Will a cancer diagnosis affect life insurance?

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Q: Last year, I purchased a $100,000 life insurance policy so that my two adult children would receive a guaranteed inheritance from me when I die, hopefully long into the future. Unfortunately, I was recently diagnosed with cancer. I don’t know the treatment plan or prognosis yet and my oncologist says it’s too early to know what the end result will be. Should I inform the insurance company of the diagnosis or should I wait until we know the prognosis? I’m afraid they’ll cancel the policy; is that a possibility?

A: I’m crossing my fingers that the cancer is discovered early enough to ensure a good outcome and that your donation actually won’t happen for many years.

I can assure you that you don’t have to tell the insurance company about your diagnosis. On the other hand, you must inform your executor that the insurance policy exists. He or she should be informed of everything aspects of your financial affairs, regardless of your health. Likewise, it is not mandatory that your executor be aware of the cancer diagnosis.

A life insurance policy becomes “effective” when it has been issued by the life insurance company and accepted by the policyholder. It can take weeks or months from the time the insurance application is completed and signed to the time the policy is issued and the owner accepts it.

Upon acceptance, the owner signs an acknowledgment that there has been no change in the circumstances of the insured or the owner (these may be two different people) since the initial purchase of the policy which could affect the underwriting thereof. (Underwriting is the process by which an insurance company determines whether it is prepared to accept the risk of a person’s death and whether it will issue a policy for that person.) A change can be a change in health, tests current medical conditions, the appearance of new symptoms or consultation with a healthcare professional. Changes also include changes in smoking status, drug use or financial status (such as insolvency or bankruptcy) and others.

Once the owner has signed the acceptance of the life insurance policy, it can only be canceled by the person who purchased the policy or in the event of non-payment of the premium. The insurance company that issued the policy cannot unilaterally cancel it, even if there has been a change in the state of health of the insured after the acceptance of the policy.

For the insurance policy to be valid, there must be no misrepresentation or fraud when the policy was originally applied for and accepted. That is, if someone purchased an insurance policy knowing they had symptoms and did not seek medical attention or notify the insurance company, or if there was other medical history that was not disclosed at the time of application. This is fraudulent and the insurance claim would likely be denied upon death. Therefore, it is imperative to carefully and honestly disclose all information requested on the insurance application.

Of course, if there is a life insurance claim shortly after a policy is issued, the insurance company may request medical records from the insured’s treating physician to confirm that there was no no medical history retained by the applicant.

If you honestly, accurately, and completely disclosed all required insurance application information last year when you purchased the policy, you need not worry about whether your insurance claim will be paid at the time. of your death.

Don’t worry, everything is in order. You can rest assured that the gift of $100,000 to your children will not be affected by your recent cancer diagnosis.

In the meantime, I wish you a long, prosperous, happy and cancer-free life.

Thie Convery, RFP, CFP, CIM, FMA, FCSI, is a Dundas Wealth Advisor and has disclosed all of her medical history in her life insurance applications. His column appears every two weeks in The Hamilton Spectator. Thie invites your questions to [email protected] or by visiting ConveryWealth.com.

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