November 27th, 2020

Insurance Understood: Don’t shoot yourself in the foot

By Steve Meldrum on October 23, 2020.

I think we have all heard he phrase, “Don’t Shoot Yourself in the Foot”. In simple terms, it means, don’t say or do something that will come back and cause you problems in the future. Well, this got me thinking about insurance and how people need to be cautious when applying for insurance. Especially when they have been declined or offered modified coverage by one company and then go searching for a better offer.

Whenever someone applies for life, disability, critical illness or long-term care insurance they are asked questions. Many people know the common ones about your smoking status, your driving history, participation in hazardous sports, medications and so forth. However, what a lot of people don’t realize is that there is a system to record part of that information in a central data bank. It is called the MIB-Medical Insurance Bureau and it allows insurance companies to check for errors, misrepresentations and such on insurance applications. Underwriters contribute to and reference the MIB data set. The MIB does not store or get into the nitty gritty details medical exams, results or doctors reports, but it does operate on codes and provides to general indicators and guidance.

The MIB acts a lot like a credit bureau, but regarding insurance. Therefore, you cannot get away with disclosing something to one company without the other company at least having a general idea. This is huge for insurance companies because they want to prevent fraud so that they have less risk and ultimately remain competitive on pricing to the end consumer. If you try to beat the system and not fully disclose your history, it is like shooting yourself in the foot and may negatively impact you. When the information does not match it will signal underwriting to investigate further. If you still cannot clarify the reason for the discrepancy, the insurance company may pull the plug on an offer. Trust me, be honest and you won’t don’t shoot yourself in the foot!

Steve Meldrum B.Mgt. CFP CLU is the founder of Swell Private Wealth Ltd. For over a decade he has specialized in helping individuals and businesses expand protect and perpetuate their wealth. For further information or tailored advice, contact him at 403-487-0490, steve@swellwealth.com or connect on social media

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