Once upon a time there was a gentleman who was in relatively good health. He was just turning 50 and had made a very good living. Since he had a desk job he expected to work well into his 70s and thus had not planned much for retirement.
One of his coworkers was diagnosed with prostate cancer and all the men in the office decided to go get tested. Most of them were far overdue for this test. To his horror, he was told that he not only had prostate cancer, but he had stage four cancer.
In a panic, he asked advice from everyone as to how to deal with this devastating news. He’d been given five months to live preliminarily before the official doctors appointment. He wondered if, before the records were official, he could go buy life insurance or something to protect his family financially and create the nest egg that he now regretted never saving.
Everyone told him that life insurance of any size requires physical examinations and at least medical questions, which you must answer honestly. If you lie on your application for insurance, the insurance company can void the policy and simply return the premiums. So, it would not help his family at all.
That’s when a friend suggested that he buy a huge home. This seemed like the oddest advice out of all that he had received. He could not understand how taking out a large mortgage would in anyway benefit his family until the person explained the plan. The plan was to purchase a large home on a mortgage and then buy credit life insurance. Credit life insurance generally does not require health questions and certainly never requires a physical examination.
Then when he died a few months after purchasing the house, credit life insurance would pay the house off and the house would become the nest egg for his family that would be sold to provide for his grieving relatives.
It might’ve been a little dishonest to take advantage of the life insurance company by knowing you are terminal when you buy the policy. But they reasoned that life insurance companies take this risk and they can bear the losses.
Armed with this plan, he went and bought a house far in excess of anything his family would ever need, and didn’t do too much bargaining because after all the price didn’t really matter. He could qualify for the mortgage that would never probably have a payment even made on it before he died.
It’s an odd thing about medical diagnosis. Sometimes a preliminary report indicates something that a final report does not. He had a very mild form of prostate cancer, and it was easily treated. But now he also had a mortgage and a really large house that he had overpaid for.
“If you want to make God laugh, tell him about your plans.” Woody Allen
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