If you ever want to see Murphy’s Law in action then this is it:
A loyal, long-standing client of mine came to see me early last year to express his concern about his rising insurance premiums. This was not the first time that we had a conversation about the increasing costs &, I must say, when comparing his premiums to the average policyholder, he was certainly up there with the bigger hitters.
To put things into perspective however, the client did have a pre-existing heart condition & his insurances were originally accepted with a 75% premium loading, but no exclusions. Given the fact that the client’s cardiologist said that at some stage he will need a heart valve replacement, then the premium loading was understandable. Initially the client was absolutely delighted that he could get any insurance at all!
The first time that he questioned the high premiums I asked him if the cardiologist had yet recommended that he undergo the valve replacement. To my surprise the answer was “yes, preferably straightaway, but definitely at some stage over the next 5-10 years” so my immediate response was “if the cardiologist has recommended the procedure be done ASAP, & you book a time to have it done, then I will initiate & manage the claim process for you”.
For 5 years we had this same conversation but I could not understand why he would not simply make a time with his doctor to go under the knife. He would get a new valve, his trauma insurance payout of over $1,200,000 would pay off his debt & provide ample funds for his recuperation period, & he could stop worrying about his faulty ‘ticker’.
What I didn’t take into consideration however was that there was a slight chance that he may not actually wake up after the procedure. Now that’s quite an interesting predicament when you think about it: Undergo a heart valve replacement, knowing there was a slight chance that you may die during the procedure, & receive $1.2M; or reduce your premiums (& level of insurance cover) & put off the procedure for as long as possible, perhaps up to 10 years.
When situations like this are not happening to us personally it is very easy to decide what we would do in those circumstances, but when they do happen to us, & there is a chance that we may never see our partner & children again, then it is totally comprehensible why one would approach this with some trepidation.
As Murphy’s Law would have, he could no longer afford the ever-increasing premiums so he instructed me to reduce his policy by 50%. My warnings fell on deaf ears & unfortunately 6 months later he was forced to undergo aortic root & valve replacements.
I know he is happy that he received some payment, & I have no doubt that he is overjoyed about waking up after the operation, but deep down there would have to be just a small degree of regret about his decision to hold off the procedure & reduce his level of cover.
To the policyholder a premium loading can seem unfair but there is a reason for it – if you have a pre-existing condition then there is a greater chance that you will make a claim. If everyone was accepted for insurance regardless of their current state of health then insurance companies would go broke paying claims. Loadings are there to ensure that insurance companies have money available to pay you when you make a claim.
Even though an insurer may initially accept your application with a premium loading, some loadings can be reduced or removed altogether. For example – your premium will be loaded if you are a smoker. If you want to reduce your premium, then give up smoking (for a minimum of 12 months). Some clients will experience premium loadings for high blood pressure or a higher than average BMI. If you want to reduce the premiums then exercise may be the answer.
There are a myriad of ways to reduce your insurance costs but if you have a fairly serious medical condition & you have been accepted for insurance with a premium loading, then make sure you discuss every available option with your medical & insurance professionals before you make dramatic changes to your policies.
Please don’t hesitate to connect with me if you feel you are paying excessively high insurance premiums. There just may be a solution.