Quick Insurance Tips

A lot of my clients will ask me if they should or shouldn’t list a particular pre-existing condition on their insurance application. Some will be very explicit and others will just hint at the question.

In many cases, nothing will happen. The client will get their private medical insurance policy approved and that will be the end of the story. But this isn’t always the case.

Your Health Policy Can be Canceled Up to 2 Years Later!

Getting a policy approved doesn’t mean that the policy will stay in force. In many cases the insurance company will rescind the contract. This means that the insurance company will cancel the policy and ask the insured for any money that they have paid in claims. The insurance company will also refund any money that was paid in premiums. An insurance company has up to two years to do this!

A client who applies for a health insurance policy and leaves something off his or her application often gets caught when they file a claim. If you file a claim for expenses associated with a heart attack or a stroke, the insurance company may look very carefully at your application. If you said that you had normal blood pressure and cholesterol they might request a doctor’s report to see if that was the case on the date you applied. If there is a record of a health issue that you should have put on your application, it can cause you a world of trouble.

Insurance companies will not rescind a contract based on some minor issue. Many clients are concerned that if they get a date wrong or fail to dot an “i” that they are jeopardizing their insurability. Policies are rescinded based on significant information being withheld. This usually means information that was intentionally withheld. People don’t tend to forget about heart attacks, strokes or their diagnosis of diabetes.

No reputable health insurance carrier will rescind a contract lightly. They need to be prepared to prove in court that the insured lied by omission or commission. They need to be able to show the court, that according to the underwriting guidelines that were in place at the time, they would have denied the application had they known the truth. They also need to be able to prove that the insured knowingly mislead them.

So if you said that you are five pounds lighter than you are or had a cold when it was really the flu, don’t sit up at night worrying about your policy being rescinded. However, if you said that you have never had cancer and you have, or you applied for a policy on Friday so that you could go to the hospital on Saturday, expect to have some problems.

No good insurance company wants to rescind a contract. It is not good for their public image. They will investigate before they approve a policy when they can. If you mention that you have diabetes and they only want to insure people who have diabetes controlled by diet, they are likely to ask for a statement from your doctor to make sure that you meet their criteria. This means that if you complete your application truthfully you are unlikely to have your policy rescinded. However, if you don’t mention diabetes at all, they have no chance to investigate.