Can life insurance be cancelled due to a new health condition?
UPDATED: Jun 3, 2013
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Asked June 3, 2013
Once you have purchased a life insurance policy, you can keep it even if your health changes. When you apply for the policy, you will have to undergo a medical examination, and if you fail the examination you can be refused. If you pass the exam, though, the policy is safe against cancellation regardless of what happens to your health after you get it.
If your health has changed since purchasing a policy, keeping the policy current is especially important. If you miss a premium or two and the insurance company cancels it, you will have to go through the medical exam process again. Since your health may have changed since the policy was written, applying for a new policy might result in much higher premiums or even being denied coverage at all.
Additionally, life insurance rates are based in part on the age of the insured. So if you've had a policy for a few years, you are going to have lower premiums than if you purchased a new policy today. This is true whether you have had the current policy for one year, or for several decades. The older you get, the higher the risk of insuring your life will be. From the financial point of view, this is possibly the most important reason to always pay your premiums on time.
One of the most important reasons to purchase life insurance for children is because the policy will be safe even if the child develops health issues later. For example, if your child is later diagnosed with diabetes or some other medical condition that could prevent her from being accepted for life insurance, the policy that is already in force is protected by insurance law as long as it is kept current.
Insurance companies cannot require you to undergo another medical exam to keep the same policy in force. Even if you have a renewable life insurance policy, that policy will be protected and renewable regardless of changes in your health. On the other hand, a renewable term life policy works a little differently, and each time you renew it or if you want to convert to a permanent life policy, you may be expected to take another medical exam as a matter of course.
Answered June 3, 2013 by Anonymous