Denied for Life

Dana's husband was denied for term life insurance because of a criminal record. He has a whole life insurance policy for $75,000. Is there another kind of policy they can get with two small children at home?

QUESTION: Dana in Portland is calling because her husband was denied for term life insurance because of a criminal record from a long time ago. He has a whole life insurance policy for $75,000. He doesn’t plan to cancel it. Is there another kind of policy they can get with two small children at home?

ANSWER: If you can’t get term life insurance, you can’t get whole life. It’s the same underwriting process. If you have it in place, you keep it because he’s basically uninsurable.

If you are uninsurable, one thing you can usually get without any kind of major inspection is mortgage life insurance, which pays off your mortgage in the event of your death. It’s about 10 times more expensive than regular term insurance, but at least you get the mortgage paid off.

Another thing you can do is anything that is an automatic-issue type policy, such as when you open a checking account and they send you an offer for a $10,000 life insurance policy. If you pick up four or five of those, then you have another $50,000 on top of the $75,000 policy you have now. It’s still not enough, but it’s something.

You say that he only has one more year before he is removed enough from the incident to get life insurance, so that’s not bad. It’s about to expire. If you want to pick up a few of those policies and then drop them next year, you could. But it’s not going to be a lot of help or a lot of money. You’ve got $75,000 in coverage; the difference between that and $125,000 is not huge, so I wouldn’t spend a bazillion dollars on that. It’s not worth it, especially when we only have a one-year window.

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