I doubt there are any of us who have not been through some period of situational depression and while depression can come in many colors and sizes, I think it is important to define it and talk about it in the context of life insurance.
Common causes of situational depression are the loss of a loved one, marriage problems, illness, problems at work and for some just the realization that you are getting older. The thing that distinguishes situational depression from chronic depression or severe depression is 1. the cause and 2. the length of problem. Generally with situational depression, getting help and time combine to make the length of the depression issue relatively short. Depending on the cause, it might last from just a few months to generally not more than a few years.
Underwriters are generally compassionate in this area as long as the depression is not severe enough to require hospitalization or impacts a person’s ability to function, such as lost time from work while being treated. Many companies will offer as good as preferred and occasionally preferred plus rates for well controlled situational depression.
Chronic depression differs in that many times there is no discernible cause and generally it is a problem for a longer time, if not for the rest of a person’s life. While a situation or event may have initially triggered the need for treatment, the never ending nature of the problem requires a different view from an underwriter. Again, if well controlled (no hospitalization or lost time), underwriters will likely see their way to better than standard rates and occasionally as good as preferred, although preferred would definitely be the exception.
Severe depression is usually a bit of a mine field for underwriters. The fact that it is labeled severe generally means that it is or has impacted the stability of life and often requires stronger medications or multiple medications. Severe depression often impacts a person’s job performance or ability to even hold a job. It may mean occasional hospitalization. It can include suicidal thoughts or even attempts.
In the absence of job impact, hospitalization or any suicidal ideations, underwriters will most often look at severe depression in the standard to slightly sub standard rate classes. If the depression has taken control of your life, in all likelihood the result will be a declined application for life insurance.
Bottom line. A good independent agent with access to all of the top companies is imperative when shopping for life insurance with any level of treated depression. This is not the time to run down to your auto insurance agent.
Ed,
I enjoy your blog! I have a life insurance question:
I have secured term life insurance back in late ’07 and early ’08 (multiple policies, meant to replace expiring policies, with an overlap in coverage between the end of the ‘existing’ policy/s and the end of the initial two year contestability phase of the ‘new’ policy/s – I had read an article that said to allow for this overlap, as most insurance companies will try any means possible to wiggle out of paying off a claim during the two year contestability phase).
While applying for the new insurance, I was asked “Have you, in the past 12 (or 24 months – there are two different carriers), traveled outside of the US and do you PLAN TO travel outside the US in the next 12/24 months?â€. This application is stapled to and considered part of my policy/s, against which charges of fraudulence may be made during the first two years.
At the time I was applying, I had not traveled and had no plans to travel outside the USA; however, now I have been offered a job overseas, making HUGE MONEY as a contractor in country that could easily be defined as a hostile area and war zone.
My question is this: should the worse happen and I eat in while working in the war zone, will my policy/s pay off? While I didn’t PLAN to work there when this all came up, I would like to work there a for a year or two and sock away some savings for my family.
I’m looking for general guidelines surrounding the word “PLAN†in the context of the phrase “do you plan…â€. I will consult an attorney if need be, and I make no claims against you for your opinion. If the life insurance benefit is at risk for dangerous foreign travel, then I will stay stateside and decline the lucrative job offer. If your opinion is that I would be covered since my PLANS did not exist for six months prior, then I will assume the liability by taking it to the next higher authority – a bona fide attorney who specializes in life insurance matters.
I am somewhat leary of calling my broker/s or insurance company/s directly, as they may flag my policy, up my rates, or cancel the policy/s altogether.
Thank you,
Bob in Tennessee
Bob,
The only thing a company can underwrite or contest is what was actually true at the time you applied. If there was no intention or planning on your part at the time of application to consider or take a job overseas, there is no contestable issue.
Life insurance companies don’t try to wiggle out of anything. The incontestability period is simply a safe guard for them against fraud.
Having said that I would document when the idea was first presented to you and when you made a decision to pursue it.
Bottom line. No plan at the time of application, no foul.
Ed,
Mucho gracias, and thank you for your opinion!
Regarding the incontestability period, I have read on several websites (you can believe what you read on the web, right?) about the horror stories wherein they will investigate any claims made within two years, looking for any out.
While I answered as honestly as I could at the time, I fret having missed a minor detail (I was in and continue to enjoy excellent health, thank you Lord). For example, I realized a few months after applying that I honestly forgot about a very minor visit to the doctor some years past to get a tetanus shot because I stepped on a nail at work. If I kicked the bucket tomorrow, would this be viewed as fraud and therefore be grounds to not pay my wife any insurance money?
In other words, in your opinion, what constitutes “fraud” and just how egregious must the fraud be in order to justify non-payment to the beneficiary?
Thanks again,
Bob in Tennessee
Bob,
It has to be an attempt to defraud the company. An example. You’ve been told by your doctor that he thinks you have cardiac issues and should have further testing. You don’t admit it on the application, don’t have the testing and die of a heart attack.
Forgetting a tetanus shot is not fraud. You are good to get on with life.