As the world turns! I suppose changes in life insurance underwriting are probably researched and well thought out, but at times it feels like underwriters just wake up on a different side of the underwriting bed and decide to shake things up. Occasionally a change will be so far out there that I swear the underwriter was abducted and their brain exhanged for alien spare parts…..fodder for a less serious blog!
With type 2 diabetes , the past benchmarks have always been a hemoglobin A1c below 7 and onset after age 40. If all other risk factors were well controlled there were a number of companies that would offer standard and even better than standard rates.
Several companies have quietly nudged their hbA1c requirement down to 6.5. Allie Beatty who is one of the most prolific bloggers on the subject of diabetes, has offered her opinion that the A1c is not necessarily the bottom line measurement of control for diabetics. I shared her thoughts with several underwriters and the vice president of the largest reinsurance company in the world. None of them responded, or maybe they did. The A1c requirements have tightened.
The shift in underwriting the age of onset is almost a rebound effect. 10 years ago the most favorable underwriting was if the age of onset was after 60. Then there was a shift to favorable underwriting at onset over 40 as long as all the risk factors were well controlled and the person was compliant with treatment. Now the earth has shifted again and age 50 is the magic number.
Bottom line. The guidelines above don’t apply to every company. A good independent agent can still find great rates if you have type 1 diabetes or type 2 diabetes. Your job is to keep control of the problem, be compliant with your treatment, and keep risk factors like high blood pressure and obesity in check.
July 24th, 2007
The old saying that “a bird in the hand is worth two in the bush” is really what I try to drive home about life insurance. Something is always better than nothing when it comes to your beneficiaries.
Let me give you a common example. A person applies for $250,000 worth of term life insurance to cover a mortgage. After underwriting they find out that because their cholesterol is absurdly high, something neither of us knew going in, the cost for that $250,000 is going to be almost twice what we had originally thought.
My advice, if they really need insurance, is to put a shorter term in force or put less insurance in force. Both of those can drive the cost back down to where the client wants it. Once they fix the cholesterol issue, we can reapply for more insurance or a longer term, whatever the original goal was. In the meantime they have coverage.
An amazing number of customers will opt to not accept the policy at all. They will forego the insurance because they didn’t get what they wanted. What they are saying, and let’s be blunt about this, is that if they can’t have it the way they want it, they would prefer their beneficiary get’s nothing, $0, rather than something.
“But if I lower the coverage it won’t cover the mortgage!” If your spouse has absolutely nothing to work with if you died, they will lose the house. If your spouse has, say, $100,000 (instead of $250,000), they have options. They can use the the smaller death benefit to continue to make mortgage payments until they have another plan in place. They can use it to pay down and refinance to a smaller mortgage. They have options. $0 of life insurance leaves 0 options.
“But I want a 20 year term, not a 10 year term!” If you put a 10 year term in force you may have just done the best thing you can possibly do for the moment. If your health changes and you qualify in a year or two for better rates, you can always reapply and extend the term. If your health goes bad, you have a 10 year term that is convertible at conversion rates that are substantially better than if you had just put it off because you didn’t get approved the way you wanted.
Again guys. Life insurance is not about you!! It is about those you leave behind and for them something will always be better than nothing.
July 24th, 2007
In a post last week I brought up the new cognitive testing that a few companies are going to for elderly (post 70) life insurance applicants. This is worthy of some discussion and review.
Just to refresh, with American General (AIG), if you are over 70 and apply for life insurance you now have to perform certain tests along with the normal life insurance exam. They offer a “Gait test” to see if you can walk around. They offer a “Chair stand test” to see if you can get up and down out of your chair. They then conclude with a “cognitive” test to see if your memory is up to their standards. Asking things like what town you are in and who the president is. Wasting 15 or more minutes of your time having you use words in sentences and then seeing how many of the words you can recall. I feel bad for the examiners that are being asked to do this.
I can tell you that I will do everything I can to make sure none of my clients are subjected to this again. One already has been and he was furious. He found it just as offensive as you might think and to make matters worse, the insurance company mis-figured his age and had an examiner do the test to a 61 year old.
The new cognitive testing is wrong.
Bottom line. Would you want your parents treated this way? If you are over 70, would you want to be subjected to this testing, knowing that younger people are not?
July 24th, 2007
