Uncovering Life Insurance’s Most Intriguing Questions

When it comes to something as vital as life insurance, most people are familiar with the basic frequently asked questions: “What is term life?” “How much coverage do I need?” and “What’s the difference between whole and term life?” While these are important, there are also those curveball questions that few people think to ask, but whose answers can be incredibly intriguing and shed light on the intricacies of the industry.

Here are some of the less common, yet highly relevant, questions we get about life insurance that don’t typically fall into the standard FAQ section.

Can You Get Life Insurance Even If You Are Unemployed?

While nothing in the rulebook states you absolutely must have a job to acquire life insurance, long-term unemployment could indeed make the process a bit more challenging. Life insurance underwriters assess risk, and part of that assessment involves looking at your financial stability and the insurable interest your beneficiaries would have in your life. An underwriter might view long-term unemployment as a liability in your lifestyle, potentially indicating a less stable financial situation or that insuring your financial value is less necessary without a consistent income. This could potentially make it more challenging to secure certain types of policies or obtain the desired coverage amount. However, it’s not impossible, especially if you have a clear plan to return to work, significant assets, or alternative sources of income.

Do Life Insurance Companies Share Information?

While individual insurance companies generally don’t share your private medical information directly with other companies, they may participate in shared databases that provide a summary of health conditions or adverse underwriting decisions. The most prominent example is the Medical Information Bureau (MIB). The MIB serves as a shared database for its member insurance companies. When you apply for insurance, the information you provide might be cross-referenced with your MIB report. If you have applied for coverage with another member company in the past and disclosed certain medical conditions, that information would be in your MIB file. This system helps prevent fraud and ensures accuracy across applications, but it’s not a detailed sharing of your full medical records.

How Common Are Life Insurance Medical Exams?

Despite what you might see in movies, medical exams are becoming relatively uncommon today for many standard life insurance policies, particularly for smaller coverage amounts. The industry is moving towards accelerated underwriting processes that leverage data from various sources (like prescription drug databases, motor vehicle reports, and MIB records) to assess risk.

However, exceptions still apply. You will likely need a medical exam if:

• The insured amount is significant (e.g., typically over $1 million).


• You have known medical issues that raise red flags.


• There’s a questionable family medical history of serious illnesses at young ages.


• You have a significant height and weight issue that could prove problematic for your health. In these scenarios, the exam helps the insurer get a clearer picture of your health risks.

Can My Insurance Company Cancel My Life Insurance Policy if I Become Ill?

No. This is one of the most crucial protections afforded to policyholders and highlights why buying life insurance when you are young and in good health is so important. Once your life insurance policy is “in force” and the initial contestability period (usually two years) has passed, your insurance company cannot cancel your policy simply because you become ill, even if it’s a severe or terminal illness. As long as you continue to pay your premiums, your coverage remains active, and your beneficiaries will receive the death benefit when the time comes. This stability is a core value proposition of life insurance.

What Happens if I Lie on My Life Insurance Application?

Lying on a life insurance application, whether intentionally or unintentionally (by omitting crucial information), can have serious repercussions. This is considered material misrepresentation and could lead to severe consequences for your policy and your loved ones. If the lie is discovered during the contestability period (typically the first two years the policy is in force), the insurance company could:

• Void coverage entirely, as if the policy never existed.


• Increase your rates to reflect the true risk.


• Reduce or even completely deny any potential benefits to your beneficiaries following your death. It is always best to be as upfront and honest as possible on your application. Transparency ensures your policy is valid and your beneficiaries are protected as intended.

Aren’t All Life Insurance Companies the Same?

Not at all. While the core product (a death benefit paid to beneficiaries) is similar, every life insurance company has its own distinct corporate setup. This includes varying strategies to determine profits, different operational efficiencies that lead to varying degrees of customer service levels, and unique loss experiences that influence their underwriting. Some companies specialize in certain types of policies or cater to specific risk profiles. That is precisely why comparing policies and companies is so important when choosing a life insurance provider. An independent agent can show you options from multiple insurers, highlighting the differences in features, customer service reputations, and pricing.

How Many Life Insurance Policies Go Unclaimed?

This is a surprising and unfortunate reality. It is estimated that about one in every 600 life insurance policies goes unclaimed following the death of the insured. The value of these unclaimed policies can vary widely, but they are estimated to be about $2,000 per policy on average, sometimes much more. Policies go unclaimed for various reasons: beneficiaries being unaware of the policy’s existence, lost paperwork, or beneficiaries not knowing how to initiate a claim. This highlights the critical importance of communicating your life insurance policy details to your beneficiaries and storing documents in an accessible place.

If you have any questions about life insurance, how it works, or how it can benefit your family—even those curveball questions that aren’t on the typical FAQ list—please feel free to contact us. As independent life insurance agents, we are qualified to answer questions about policies issued by any company and can help you navigate the complexities to find the best fit for your needs. Reach out to us today for clarity and peace of mind.