Note that this post does not intend to provide legal opinion. I will do my best to update this from time to time or as developments become available.
I have compiled several questions that I get a lot whenever a PLHIV is interested but hesitant in getting a life insurance plan. Here are my answers to them.
First Question: I learned that PLHIVs can now apply for an insurance plan. Should I disclose my HIV status during insurance application?
The short answer is YES but allow me to explain further. The choice to disclose is always the discretion to the applicant, and the implications can be largely different.
Scenario A: Disclose HIV status
If there is no fraud or concealment, i.e. the client declares all pre-existing conditions including HIV infection, and truthfully answers all questions in the insurance application form, and the insurance company subsequently issues an insurance policy, then the death benefit is valid as early as Day 1 of policy effectivity or reinstatement. This means despite the risks presented by the applicant to insurer, the later decided to take the risk and insure their life. Note that the temporary life insurance certificate provided by the insurer while the policy has not been issued does not apply in a PLHIV’s case since there are medical declarations made that are yet for evaluation and underwriting.
The applicant will be required to undergo full medical examination, submit an Attending Physician Statement accomplished by the HIV doctor, and submit all available laboratory results such as CD4 count, HIV Viral Load, confirmatory test, lipid profile, and diagnostic tests. A few insurance companies also require the applicant to undergo another HIV screening from an insurance company-accredited clinic. The applicant will likely shoulder all costs for all medical procedures that may be required and these requirements may vary per insurer.
Based on the findings of all medical submissions, the insurance company may outright a) approve or b) decline the application, or c) postpone (in cases where the CD4 count is too low, or when the viral load is not yet undetectable) or d) accept with substandard rating (higher premiums and/or special restrictions on claims). Co-morbidities or co-infections such as Hepatitis B/C, pneumonia, tuberculosis, fatty liver, elevated creatinine, hyperlipidemia or hypertriglyceridemia, other STDs, opportunistic infections, etc.) are red flags to the insurer but what qualifies as insurable can vary per insurance firm and is also based on individual subjective considerations. A postponed application means the applicant may still re-apply after 6 to 12 months when the risks have become acceptable to the insurer (e.g. CD4 has reached acceptable levels in consecutive tests, or HIV viral load requirement has been attained). Poor adherence to HIV medication or failing to follow up regularly with the HIV doctor can also be grounds to decline the insurance application.
The HIV status declaration will be encoded in the Medical Information Database with the client’s consent – check the insurance application form because it is usually written there. This means all other insurance companies where the person applies will have access to the fact that the applicant already previously declared a positive HIV status with another insurance company.
Scenario B: HIV status is not disclosed
Should the applicant choose not to disclose their HIV status, premiums will most likely be based on standard rates. However, death claims including suicide will only become payable to the beneficiaries once the policy has been in-force for at least 2 years after the date of policy effectivity or reinstatement. In case the death benefit is not payable, and the policy contract is rescinded, the beneficiaries will be entitled to the refund of all premiums paid, including charges and fees deducted from the plan. If the insurance plan is investment-linked, the policy’s account values will also apply to the refund of premiums.
If the financial advisor or insurance agent knowingly concealed a material fact in the insurance application (in this case, the applicant’s seropositive status), the financial advisor may lose their license to sell insurance plans aside from the possible legal cases that the insurance company may file against the agent.
Second Question: Can I also get a health insurance plan such as a standalone critical illness insurance or hospital allowance plan, or attach these as riders to my life insurance policy?
Unfortunately, most health insurance variants or contract supplements/riders (such as critical illness benefit and hospitalization allowance benefit) would remain to list HIV-related illnesses and complications as a permanent exclusion. So, whether the applicant disclosed their HIV status during insurance application is immaterial since coverage exclusions for critical illness claims and hospitalization claims are not payable. This holds true regardless of the incontestability status of the insurance contract, or even when the waiting period for the coverage of pre-existing conditions has been satisfied. Additionally, it must be noted that incontestability clause only applies to the benefits of the insurance plan that are not subject to the plan’s exclusions and contract provisions. So, unless it is upheld that excluding HIV-related illnesses from health insurance coverage is illegal or a form of discrimination, non-coverage of HIV-related illnesses in health insurance plans will remain enforceable.
TL;DR: Check the provisions on exclusions and waiting period (if any) of the policy contract.
The common follow-up question is whether the insurance company will find out that the deceased insured concealed a material information that would have otherwise caused the policy not to be issued and subsequently for claims to be denied, and the answer can be tricky. Insurance companies really have a great talent at finding out that an applicant did not disclose a previous illness or medical history on their insurance application. In addition to this, the medical abstract from the deceased’s attending physician will reveal a boatload of medical information about the patient and investigation on claims will likely start from there.
Third Question: As a PLHIV, can I make a claim on hospitalization or critical illness insurance plan/rider if the illness is not related to HIV?
The following must be satisfied, but still not a guarantee that a claim will be approved:
– If HIV was contracted prior to the policy issuance or reinstatement, the insurance plan must already be incontestable (otherwise the contract can be considered void).
– The illness must be unequivocally unrelated to HIV
– The illness is not listed as a permanent coverage exclusion
– Waiting period in relation to diagnosis of the disease is satisfied
Fourth Question: What happens to a death claim if the insurance plan was already issued and in-force before I got infected with HIV and died before the insurance policy becomes incontestable?
During the contestability period, the insurance policy can be considered void if there was fraud, concealment, or misrepresentation during the time of insurance application. Acceptance of risk by the insurer depends on the risks presented by the client during insurance application, but not afterwards. Therefore, illnesses contracted after policy effectivity or reinstatement does not make the contract voidable. Hence in this case, the insurer should honor the death claims.
Last Question: I am a single PLHIV, should I still get a life insurance plan?
YES, but I only recommend it for two reasons:
1) If somebody else will be financially burdened by the person’s passing. Think about leaving hospital bills, funeral and burial expenses, and unpaid debts to family or partner or relatives.
2) One should also get a life insurance policy for estate planning, so that heirs that afford the taxes that must be paid before properties can be transferred in their names.
Also, when getting a life insurance policy, make sure that:
– The premiums are reasonable and within the budget;
– It answers the insurance needs of the person; and
– The benefits and features of the plan are completely understood.
The author of this post is a financial advisor. For further concerns, do not hesitate to contact him using the information below.