“Make sure you buy life insurance before your disability claim is finalized.”
I hear this myth a lot. And, like most myths, it’s based in a little bit of fact. But that little bit of fact doesn’t make it a true statement.
Insurers underwrite based on your actual medical history and symptoms, not on whether some other system has stamped you “disabled” yet. You must disclose all medical facts you already know. Failing to do that can void a policy later, leaving your family in a bad situation.
The Insurance Application Process
Purchasing life insurance requires you to fill out a relatively detailed application, that includes questions about your medical condition. This application goes to an underwriter, who estimate the risk that you will die while the policy is in force and to decide whether to issue coverage, at what price, and with what conditions. They rely on the information you provide and, when needed, information from other sources including your medical records.
Key elements of life insurance underwriting typically include:
- Prescription history, medical records, or attending physician statements if your answers trigger concern
- Possible lab work, exams, or additional questionnaires for specific conditions
There’s two sides to why this isn’t exactly correlated to your disability claim.
The first side is that there are many conditions that may give you a disability rating but likely won’t impact an insurance application at all. For example, having arthritis in your knee may give you a disability rating, but probably won’t keep you from getting life insurance.
More importantly, the insurance application asks what symptoms, conditions, diagnoses, test results, and treatment plans exist right now. You don’t get to “forget” a condition because you haven’t sought medical care. If you have a symptom or condition, you have it – and it needs to be listed on your insurance application.
Many conditions that support a disability claim have little effect on life expectancy, and some conditions that are serious for mortality never result in a disability claim at all. Any disability claim does not change the medical facts that already exist.
Why You Must Disclose This Info
An important phrase in most insurance contracts is “utmost good faith.” This means each party must be completely honest about facts that matter to the risk. For life insurance, that means you must disclose every medical fact you know. This applies to the the insurance application, on any exam, and in written statements used to prove insurability.
Courts and statutes define a material fact as one that would influence a reasonable insurer to decline the risk, change the price, or alter the coverage terms if it had been disclosed. A few important points flow from that standard.
- You must disclose conditions and evaluations you actually know about, even if they are mild, under investigation, or seem unrelated to your eventual cause of death.
- A fact can be material even if it is not what eventually causes the claim; what matters is whether it would have changed the underwriting decision at the time of application.
- Innocent forgetfulness, misunderstanding the seriousness of a condition, or thinking “this is not important” does not protect the policy if the fact was material and known.
If you have symptoms, diagnoses, medications, or treatments, those are facts you know about and that are often material to life underwriting. You must disclose them, or you’re violating the “utmost good faith” premise of the contract.
In other words, the rule is not “tell us about your disability claim.” The rule is “tell us what you know that a reasonable insurer might care about.” Trying to squeeze in a life policy before some step in the disability process does not change what you know about your health, and that is what the law and the contract focus on.
Non‑disclosure Can Harm Your Family
The real danger of this myth shows up years later, when the insured party is gone. One high-profile case changed how I view insurance applications. And I’ve since learned that this case isn’t unique.
The problem? The insured dies, the beneficiary files a claim, and the insurer reviews the original application.
In this case, the beneficiary sought payment on a $1 million life insurance policy after the insured died. The insurer denied the claim, arguing that the insured had failed to disclose an accurate medical history. Had the insured disclosed their sleep apnea, it may have affected the company’s decision to issue or price the coverage.
The beneficiary sued, and lost. The court found the omission of the sleep apnea was a material ommission therefore the contract was voidable. In the end, the insurer was entitled to avoid the policy. The intended beneficiary received no death benefit. The family’s financial plan was upended by an incomplete application.
A Better Approach
Focus on accuracy and completeness when applying for life insurance. If necessary, work with an advisor or agent to help you understand the questions so you can answer them accurately. An honestly underwritten policy, even at a higher premium, is more protective than a less-expensive policy that is open to being voided for misrepresentation. It’s not worth risking your family’s financial future to save a few dollars on a premium now.
The myth suggests timing is everything, but truthfulness is what protects your family. If you know something, it belongs in your insurance application. It may impact your insurability or cost, but it’s better than leaving your family without protection that they think they have.
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