108. How to Get Your Whole Life Policy Approved

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Can I still get whole life insurance if I'm rated or if I have a medical condition? The answer is.

We. Yes. Oh, we see it.

The answer is yes. Now let's presume that you're otherwise life insurable. Okay. But you have a medical condition. I'll give you a recent example. Diabetes, type 2 diabetic. I don't think I'm life insurable. Why don't you think you're life insurable? Well, I'm type 2 diabetic.

Type.

Well, I'm not an underwriter.

And the person who lets us know whether or not you're in fact life insurable is an underwriter. So why don't we get in touch with the underwriter? Well, how do we do that? We apply for a policy.

Oddly enough, they won't take your calls otherwise.

Yeah, they got no sense of humor at all. Those guys don't want to talk to you unless there's an insurance contract coming in, a policy application coming in and.

It what's important to understand, understand so the word rate it. Right. If, if you know, rate it. What does that even mean? Well, let's do this. Let. Rich, do you have your illustrator handy?

I, I do, yeah. Let me clear up a free, a free page here.

If we were to. So let's just pull up just a, a policy illustrator and then we can illustrate our teaching point. Now in this scenario we're going to be dealing with a 45 year old male who's a non smoker but is a type 2 diabetic.

Okay.

And we're going to contrast that with a male who's 45 years old, non smoker, who's otherwise from a medical standpoint, standard. Okay.

Okay.

And so we'll run those two and see what we come up with. Now we want to have a starting death benefit of a half a million dollars inside of a. We'll run, you know, wealth accumulator and we'll maximize the accelerated deposit option. And let's see what we, what we come up with. And for folks who are tuning into the YouTube video, who are in the industry, who are life licensed, this will actually be very beneficial for you if this is something that you haven't seen in the past or haven't addressed in the Past in terms of having the conversation, the crucial conversation, and.

What we need to do is go through the underwriting process by submitting an application. And that application includes medical underwriting. So the underwriter at the insurance company takes a look at your medical history, your family medical history, being that you're a type 2 diabetic, that is going to automatically trigger what's called a attending physician's statement. So there's a document that insurance company will request be completed by your attending physician, your family doctor, whomever provides you with primary medical care. And then the underwriter will make a determination as to whether or not, based on all of the medical evidence gathered, that whether or not they're going to offer you the opportunity to purchase the insurance contract. Now, if you're otherwise healthy and no medical conditions, every contract is issued, rated, and the rating begins at standard. That's the best. If you were to think of how do I get the best rating? Well, the best rating on a dividend paying participating whole life insurance contract in Canada is a standard rating.

Okay.

From that point we start to see percentage increments on the rating table.

And those percentage increments go from anything above standard all the way to 600%. If you get to a 600% rating, you're 1 percentage point away from never being life insurable again. If you're somewhere between 600% and standard, you are life insurable and you should purchase some insurance, get your hands on it.

Important to know if you're at a rating level. The reason to get the insurance went up, not down. Thank you.

The sense of urgency, right?

If the insurance company, who've been doing this for a really long time, they took a look at your, all the factors and they said, boy, oh boy, hey, Richard, we're gonna have to give you a rating, a substandard rating that you know isn't standard, it's substandard. And we're gonna rate you at 225%. You should be jumping all over that because they know something you don't know.

That's right.

They think that your best before date has gone up, meaning your time, you know, your time horizon remaining on planet Earth might not be as long as you had thought before you submitted that application.

Precisely. Precisely Correct. And so let's pop up an illustration. Let's see.

Yeah, I'm gonna bring that up here. And you know, another thing we should be answering while we do this too, Jay, is, you know, just, just extrabuting like what kind of a health check is done as part of the process. Yeah, yeah. And then how do you know existing health conditions affect the eligibility? So, so I, I think we're kind of talking about that right now, but, but also just you know, indicating like what kind of health check is done. So I'm gonna bring out the, the example that I've got here and I, I, I, I chose the 45, but I did a, a rated version and I did a standard version. So here's the standard version first.

So while we're, while we're diving into this. So to, to address what you just shared, Richard, so the, the medical underwriting process, the, the health questionnaire is going to literally cover every zone of the human body. So they're looking for neurological function, they're looking at, you know, cardiovascular, looking at kidney funct, you know, all of those elements put together to determine your medical suitability for being approved for a life insurance contract. And if you think of conditions like cardiovascular disease, cancer, some of the more common instances, it's not that a person would not be life insurable again, it just means just not right now, hey, I just got, you know, diagnosed with this condition, some form of cancer or, you know, I just suffered a heart attack. It's not that you're never going to be life insurable again. It may just be, not right now. The application wouldn't even go into the insurance company if that was the case. The life license agent that's working with you would identify, okay, now's not the right time to submit it, but there may be another person that you have an insurable interest in that you might want to life insure. So if you think about just the structure of this, you've got the policy owner, the life insured, the life insurance company, the policy owner and the life insured do not need to be the same people.

However, that being said, a decline is rare and a decline is rare not because it's rare on the part of the life insurance company. It's rare because the, the well known declines are caught in advance before the contract application is even submitted to the insurance company. And, but from the insurance carrier itself, a decline is rare.

So let's, and with that note be in mind, a lot of that's because of the types of conversations and disclosures that a person who's looking to apply for insurance has with their advisor. So totally the more that you're able to disclose to your advisor, the quicker they can help assess that rather than wasting time and getting, you know, you can often ask for like a preliminary assessment before you submit an Application to a degree. And another thing to note that you identified, Jay, I think is really important is that you know, you, you may not know about a certain medical condition or something that you have, but you might be undergoing some testing. So if you're waiting on test for test results from an ultrasound or an MRI or something of that nature, often that will stall an application because their insurance company isn't going to make a decision until they see what did those results provide. And was there any recommendations by your medical professional because of that result? Okay, I'll bring up our example again here. So here's the standard one again. We used a 45 year old. I just picked a random number of $500,000 of pure whole life coverage. And that has a premium at this stage with this company of about $13,510. And then we have a flexible paid up additions component of a little over $17,000 in this example.

Now this is a, there are many different ways that the policy can be engineered. This is just for simplicity. In the example what we want to look at is the minimum required premium for the same amount of death benefit. So this proposed life insured that you're looking at here is rated standard. So this person is otherwise medically healthy, no preexisting conditions.

The blood work came back fine, urine sample came back fine. Everything is within normal thresholds. And in order for that person to purchase a starting death benefit of a half a million dollars and a dividend paying participating whole life insurance contract, the minimum required premiums 13,510. Now if we stood alongside the type 2 diabetic who applied for the same thing, the same starting death benefit, where did we land with the minimum required premium?

Now I, I did a 225 rating and I think you were asking me to do a just a smoking rating is what actually took place. Is that correct?

No, in this case with a type 2 diabetic, let's say, I mean we can leave the 225, but it'll probably be closer to 175.

Okay, well I'll do the 225. Cause that's what I have up and then perfect, okay, you can look at a 175. So here we have a rating of 225 that we're showing the same person. And so now it's 17,005 45. So there was about a 5, $4,000 increase, rough, you know, basically on the premium requirement for a 225% rating. So again we have these percentages that the insurance company used which our brain wants to, you know, assess the percentages as it enters our brain but we don't know exactly what the reference point is. And so it doesn't mean that it's going to double the cost of the premium. That's not accurate. It's a, it's a, there's a scale that's involved there. And so the premium didn't actually increase that much considering the risk that the insurance company is potentially taking on now.

That person, that same person might say well I don't want to pay any more 13,000. The 13,000.

Plus. And so in order for the type 2 diabetic to pay the same amount of minimum required premium.

Then you can do one of two things. You can reduce the starting death benefit to the degree where you're now capturing that minimum required premium, but you can also do a combination of a reduction in the minimum required premium for the participating death benefit and add some term to cover the difference at a rated percentage to get you to that same starting death benefit amount. So there's, there's, in other words the rating is something to celebrate in the sense of being approved.

We got you covered. You got, you're getting an offer for insurance coverage that obviously your ability to get that seems to be at some level of risk and you've received an offer. Excellent.

Good news, big time good news. And if you want to start with the same amount of minimum required premium, well then your death benefit decreases from 500,000 as a starting death benefit to 376,645.

And that's using this specific rating for our 45 year old sample who's got a 225 rating above the standard. So again we you there was a hundred, there's $125,000 of whole life death benefit that is no longer available. $124,000 that's no longer on the table for the same premium la but you still get a great policy. And in either situation the standard person or the 225 rated person cash value is going to accumulate and a good amount of it. The difference in the cash value numbers is not going to be dramatic. It's quite minimal because similar premium outlay is what's going into the policy. Yeah.

And so most importantly.

If you have a medical condition and you're wondering whether or not you're a approvable to approvable in the strategy of the life insurance business, if you're wondering whether or not you can be approved for coverage, there's Only one way to find out. You have to go through the application process. And there's no cost associated with that. It's an investment of time. And some medical evidence may need to be gathered like a blood sample, urine sample, in some cases a resting electrocardiogram, an attending physician statement, et cetera. It's just non invasive. It's just gathering samples so that the underwriter can get a good sense of how your body, the human body, is functioning and your overall health. And if you're rated above standard, what Richard referred to technically as a sub standard rating, then that is cause for celebration in the sense of you're approved, you're being offered the opportunity to purchase permanent coverage. Don't hesitate for half a nanosecond to say, I'm buying. And in what we, knowing what we know about the strength of these contracts, purchase everything they'll offer to you. So you may want to rethink your thinking and say, I'm not going to put 13,500 in this deal. If I've got 20,000 to put in this deal, I want to buy as much as you're willing to sell to me.

And additionally, sometimes the ratings that are received, they're temporary. Meaning like, hey, if you make these adjustments and you get it reassessed after a one or a two year time frame, then we're willing to reassess the rating that we have on the policy as well. So that's another thing to be aware of. Now, Jason, you know, a question that would come up for people might be, hey, would this be expensive? Or even is it difficult to set up, you know, if I'm going to be difficult to insure? And I think, you know, we've answered the difficulty question because the answer is we don't know. It's only difficult in that maybe you have to hound your doctor to get a tending physician statement or a nurse has to come to your house and you know, you have to pee in a cup. There's not a lot of difficulty there. So the difficulty level, I think, is quite minimal as far as it would be expensive. Again, a lot of people who are asking questions like that, it's because of past conditioning about what the insurance is like in the world of insurance for everything else that you do. But with this insurance, it's not the same because you want to pay a premium. You're trying, what you're trying to do is pay a premium. And so there's no such thing as expensive. It's just a matter of for the premium I put in. How much death benefit do I get if I have that substandard rating? We went in our example, we went from 500,000 down to 376. The same premium dollar went in, which is what we wanted. We just got a lower death benefit for that amount. That's not expensive. That's simply getting your objective accomplished, which is I want the whole life insurance. I want to get as much as I can. This is the dollars I'm working with. Boom. This is what the insurance company is willing to offer.

There you have it. You made the right decision to watch this video. There's a playlist that will appear for you, for you to continue your journey of learning and we want you to make the rest of your week great. And be sure to leave a comment. Ask a question. If you liked the video, tell us why. If you didn't like it, tell us why too. We'd love to hear from everyone in terms of your feedback. Rich thanks again pal.

Cheers.

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