Why I Always Recommend Conditional Coverage

Author:  Patrick Umphrey

Licensed Life Insurance Agent at Matrix Direct

I have been working at Matrix just over a year now, and I really love my job. Probably because I love people, and I love helping people get the term life insurance policy that's the best fit for them and their loved ones.

When my manager came by my desk a few months ago and asked me if there were any customer stories I would like to share with others, it was a no-brainer. I had recently worked with a man from Kansas. He was an existing customer with term life coverage of $250,000, but he was nearing 70 and starting to think about his estate.

That said, he was calling to buttress his estate and he wanted to replace his existing policy for one worth twice as much—$500,000. Based on the fact he had no health concerns whatsoever, he really sounded like he’d easily qualify for the best rate on term life. There were only a few steps to take.

We completed his life insurance application over the phone on September 29, and he scheduled his paramedical exam for October 7. Before we got off the phone, I asked him what turned out to be a very prescient question.

It’s pretty standard to offer Limited Temporary Life Insurance (conditional coverage) during the underwriting process, just in case anything should happen during the window of time between a client taking their paramedical exam and being approved for the coverage by the insurance company. I explained it to him, asked him if he was interested, and he was.

I then let him know that the time to secure this conditional coverage was now, and he agreed as well—after all, the point of limited temporary life insurance is to provide coverage during the underwriting process, which basically begins after the application, is submitted and the paramedical exam is completed. He agreed to that as well, and provided a credit card to bind the terms.

Additionally, he signed his application electronically within 45 minutes of our phone conversation. This process could not have gone faster, and it turns out that that was a fortunate thing.

On October 9—only 10 days after we spoke—I received a call from his doctor and learned he had died from an aortic aneurysm the day before, just one short day after taking his paramedical exam. It was shocking and tragic to learn of his passing, but—as I am in the life insurance industry—my thoughts went quickly to his policy and his beneficiary.

I remembered that he had agreed to the conditional coverage and I was pretty sure that his beneficiary would be entitled to the full benefit available. Sure enough, he was and the insurance company paid the full death benefit of $500,000.

While this story has at its center the tragic death of a good man, it also has a very important lesson for anyone considering buying term life insurance—or anyone who sells life insurance. Basically, this story demonstrates the importance of taking advantage of any Limited Temporary Life Insurance offered during the underwriting process.

Having the right term life policy is such a critical part of maintaining peace of mind. And I always tell clients, “Why wait? Peace of mind can begin with conditional coverage.” To me, it just makes sense. The whole point of life insurance is planning for the worst, and the fact is, we never know when that might be.

In some businesses, something akin to conditional coverage would be considered an “up-sell” or a “value-add.” But in the life insurance business, it’s just good sense.