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How to Explain Policy Ratings, Declines

Originally published on Advisor.ca

From time to time I receive e-mails from consumers with questions like “I wondered if it was legal for insurance companies to refuse to insure children with autism?”

What advisor hasn’t dreaded the rated or declined application conversation with their prospect or client?   Since the demise of the captive agents, training on how to handle these situations is almost non-existent.

But think about what you learned to get life-licensed. You know the answers.  What you may not know is how to put it into “kitchen table talk” like this ….

“The short answer is that yes it is legal for insurance companies to refuse or highly rate risks because a life insurance contract is a unilateral contract.  That means that once the company has underwritten and issued the policy, the owner of the policy is in complete control—not the life insurance company.  Once the contract is issued the life insurance company is obligated to honour all of the guarantees and benefits of the contract and is ‘on the hook’ to pay the death claim when it is filed—whether death happens after the collection of only one monthly payment of years of payments.

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Originally published on Advisor.ca

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