Taking Care of the Kids

[Walter Pickel]

Let's turn this around.

It would be useful if the NACD or the CDS could work with a major insurer to convince them that cave diving has low enough mortality stats to not warrant an exclusion clause. As an incentive to that insurer, NACD or CDS could advertise their product on the organisation's website as an "official" insurer.

For the NACD, I tried (for months) to get NACD branded gear insurance last year without success. The reason being simple economics; there aren't enough of us for the insurance company/underwriter to make money on. All of the underwriters (6) and insurers (4) I spoke with gave me the same answer.

If there were 10,000 of us and everyone elected for the policy they might have the ability to make money. I strongly suspect the same situation will arise if one of the organizations tries to brand life insurance as well. Not sure it would be a marketable product for a training organization to sell life insurance anyway.

[cwj]

Do exclusion clauses arise in response to high incidence of events or as a way of dealing with adverse selection and information asymmetry? It seems like the annual mortality/morbidity stats would be helpful if it's incidence of events that is deterring insurers from extending coverage to divers.

Thinking about how exclusions for other conditions/activities have changed, my life insurance policy now has a 2 year quasi-exclusion period after which it will pay out under suicide. Would a similar delay help to ensure that the "bad risks" in diving are not all flocking to obtain insurance?

[aainslie]

I think it's the asymmetry and selection problems, PLUS assumed risk for a sport they have limited stats on... which is a way of saying that there's both systematic and idiosyncratic asymmetries in information for the insurer.

The 2 year clause sounds like a great idea for mitigating ALL of these problems for an insurer. Problem is, we deal with brokers, not actuaries. And it'd be hard to explain these concepts to a broker.

Which is back to why it would be nice to involve a group. I see DAN has something:

http://www.diversalertnetwork.org/in...e/coverage.asp

But it ain't cheap. Interestingly given that the premium is primarily based on age, they aren't really charging that high a premium for diving. Under 29's are paying just over 0.1% of the payout. That's pretty good odds!

I'd prefer it if they did slightly more vetting. This policy covers smokers, and generally does little exclusion for health reasons.

It might help to point your broker to this, and THEN see if they can come up with something better. They would recognise this type of policy and could probably offer you something better if you're in good health.

Mike's right. Disclose everything. I doubt they'd refuse to pay if you died in a car crash because you didn't disclose diving... but if you DID die diving your family may be left in bad shape.

[Line Squirrel]

Mike's right. Disclose everything. I doubt they'd refuse to pay if you died in a car crash because you didn't disclose diving... but if you DID die diving your family may be left in bad shape.

I don't know and I'm no lawyer but...

I don't think this is necessarily true, if it were, wouldn't they just add an exclusion into the policy for non payment if the death occurred while, or a direct cause of, diving?

I believe that most insurance investigators are motivated by a hefty bonus to find a reason not to pay out a million dollar policy.

Failure to disclose being an active diver, if asked, in signed contract is a lie and an intentional move to deceive [fraud], making the contract null and void.

We must have some lawyers here. It would be interesting to find out the correct answer to this.

[Line Squirrel]

Just a real quick Google search I found this...it's out of Colorado, but it's interesting none the less.

It specifically addresses non disclosure of existing medical issues but I would think non disclosure of recreational activities would be subject to the same rules.

__________________________________________________ ___________________________

From this web site http://www.douglasturner.com/2007/12/10/life-insurance-suicide-and-the-two-year-one-year-rules/

Life Insurance and the Two Year Rule:
After a life insurance policy is in force for two years, failure to disclose a medical condition on the insurance application cannot be used to defeat coverage. Theoretically, a person could lie through their teeth on the insurance application and the beneficiaries could still collect a death benefit so long as the policy is in force for two years before death.
This rule can be used by the insurance company, too. If an insured dies within that two year window, the insurance company can deny coverage if the insured did not fully disclose his personal and medical history, even if it has nothing to do with the cause of death.
As you can imagine, if an insured dies within that two-year period, the insurance company may make every effort to obtain medical records, look for something that was not disclosed and deny coverage. For example, if the insured is hit by a truck and did not disclose treatment for cancer, the death benefit can be denied. The fact that it was a truck that killed him is not relevant.

[skip]

My wife asked about scuba diving being covered and the agent (at work, group policy) instantly pulled out another form asking the details (training agency, how many dives per year, c-card number, etc.). It wound up adding about $10.00 per month on the policy. However, if she hadn't asked about it the agent (HR person) would not have produced the form and presumably she would not have been covered. I too have group coverage at work, but my policy specifically mentions "scuba diving, all types," as being covered without any special forms to file. Also covered is piloting a small plane, hang-gliding, sky-diving and other stuff. I recently upped the life insurance to the max and maxed the life-time disability, which meant a complete health check and doctor form to fill out. The form asked about recreational activities and I checked the box for scuba diving, but wrote in "in caves." They never asked for c-card or anything and approved the policy.

-skip

[curtschu]

It appears a group policy through work is you best bet. I have curious so I check my policy at work too. As long as I didn't ask for more than the standard two time yearly salary plus $100,000 supplimental, there is no underwriting. Then if you want more there is underwriting questions and Scuba is asked about. Since I didn't want to open jars I left it at the $100,000.