Archive for May 28th, 2008
In my last post I hope I made a clear distinction between a life insurance agent who is qualified to handle cases that involve health issues, and those who really shouldn’t play with sharp objects. At the end I alluded to the definitive way to separate the two groups.
First let me broach the subject of bait and switch. Baiting, telling the client that they qualify for a rate that they don’t, is a way to get the application. Getting the application is a way to get anyone who told you the truth out of the picture. Let’s say I quote you $1200 a year for a term insurance policy. I’ve presented my quote based on the fact that I know you have type 2 diabetes that was diagnosed at age 51 and we reviewed your last set of labs and I know that your hbA1c was 6.4. Another agent quotes you the same policy for $800 a year. Most people will jump on the less expensive band wagon and won’t even talk to me again.
The switch is when the policy is approved. Generally, because a bait and switcher just goes with their favorite company (where they get the highest commission), the approved rate will come back even higher than what I quoted. The B&Ser will come up with some song and dance about why the rate changed and then, having just drug you through a 2-3 month application process, suggest that unless you want to start over and take your chances, this is really as good as it is likely to get.
I know you’re all sitting there saying that you wouldn’t fall for that, but the truth is that bait and switch is alive and well because most of you will accept the higher priced policy rather than start over.
You sound mean, but you’re not.
Which brings me to the magic bullet. How can you weed out the B&Ser right up front? How can you tell if they’re telling the truth or just low balling a quote to capture the application? The bullet is called a trial offer. They way trial offers work is that, for instance, I would send an email out anonymously to the underwriters from all the companies I represent. The email might go something like this:
Proposed insured born 3/14/53, 5′10, 175, non smoker. Diagnosed 4 years ago type 2 diabetes. Most recent a1c 6.4. No other risk factors. All other labs normal. Good family history. Takes 500mg Metformin daily. Looking for $500k term insurance.
Insurance underwriters respond, always with the caveat that any final offer is subject to an exam and a review of medical records. There offers, and these are actual insurance company responses, come back like this. “Tentative ok without a rating if fructosamine is normal”, “Very tentative Standard No Nicotine subject to app,exam,labs,EKG and APS (attending physician statement)”, “Our tentative quote is Standard (due to glucose)”. Once received, we know which company will ultimately provide the best approved offer.
So here is the way to ferret out the bait and switch agent. If you are shopping for insurance and you have health issues, and one quote comes back significantly lower, insist that they provide you with a copy of the trial offer from the company they are quoting. If they don’t have one, they don’t know what they are doing. If they try to tell you that they don’t need one or that companies don’t really honor trial offers, they don’t know what they’re doing. And ultimately, if you think there is some chance that they might come through, apply with them and also apply with an agent who can produce a trial offer, and do it concurrently. Simply let the agents know that it is your intention to accept the best offer after underwriting. That’s fair. Smart too.
Bottom line. The life insurance industry has it’s share of slime balls and their favorite sport is bait and switch. You now have the ultimate weapon for stopping them before they can get you to join their game. Do you want a low quote or an honest quote? Do you want the policy to be approved with no surprises? Do you want to deal with an honest life insurance agent? You decide the game you’re going to play.
May 28th, 2008
There must be a couple of million people in the US licensed to sell life insurance. If you take in the giant internet mega agencies, all of the independent agents, and all of the captive agents (work for just one company), the possibilities for purchasing life insurance become staggering.
Put in context, there are probably as many, if not more doctors. Does that mean that no matter what is wrong with you, there are 2 million choices for a place to go for treatment? I’m thinking not. If you have a cold, a cardiologist is likely not going to see you, and if you’ve had a heart attack, it’s highly unlikely that your general practitioner won’t refer you to a specialist. There are those unfortunate times when GP’s think they know the answer to everything and attempt to treat serious illness in house, but those are rare.
Life insurance is one of those areas where the millions of choices doesn’t mean you have millions of appropriate choices. For the average very healthy person under 50 probably any independent agent or agency can do a good job of finding a low rate with a good company. As I’ve mentioned before, young healthy buyer beware though. Even though the mega agencies on the internet can find competitive rates, they have a bad habit of signing lucrative bonus contracts to push the bulk of their business toward a certain company. The good news is that the company is generally competitive. The bad news is that, as I’ve noted in so many previous posts, competitive doesn’t mean best. An independent agent doesn’t do the volume and therefore we are never offered these type of contracts. Speaking for myself, I place every case with the best possible price and product for my client. Seems like the right thing to do.
One other note on our perfect health client. Stay away from your auto and homeowner’s agents. You will be outrageously overcharged for life insurance because it isn’t what they do. Sure, they have a product and they are licensed, but having a license doesn’t mean you know what you’re doing and having a product doesn’t mean the price isn’t way too high.
But I want to make a very important distinction. Just like the doctor scenario, if you have some medical issue, a knowledgeable independent agent is where you want to go. We are the specialists in the life insurance business. Just a quick list of what I am talking about will help separate the GP’s from the specialists. If you have diabetes, Hepatitis C, heart disease, a history of cancer, a seizure disorder, mood disorders such as depression, anxiety or bipolar, and on and on. These are issues that it is hard for the average agent to provide good service on. These are issues that will get automatically declined with most property casualty companies (auto, homeowners).
How do you know you’ve called the right person or stepped in the right door? All insurance agents make money from the culmination of a sale, the placing of a policy in force. They all want your business and the truth is that most of them are struggling. There is a real tendency in the business for agents to take on business that they have no idea what to do with, just in hopes that it works out. It usually doesn’t. You know you’ve found the right agent if they show a knowledge of your particular issue by the questions they ask. If they don’t ask questions they don’t have the information it takes for them to come through for you. If they don’t seem to know, for instance, the difference between type 1 diabetes and type 2 diabetes, they don’t have any business working for you.
Bottom line. Before you commit to applying through an agent, be confident that they know what they’re doing. In my next post I will reveal the secret weapon for weeding out the BSer’s from the straight shooters. It works every time, guaranteed.
May 28th, 2008
The word cancer used in reference to anything to do with life insurance usually conjures up visions of declines and huge rates. In that regard skin cancer is something of a different animal.
Skin cancer is the most common cancer in both men and women, mostly thanks to the fact that most of us had no idea that sun could be harmful 30 and 40 years ago as we religiously broiled ourselves at Memorial Day lake parties. There are three types of skin cancer.
Basal cell carcinoma, sometimes called non-melanoma skin cancer is the most common. It is most frequently seen in light complected people. Basal cell has about a 95% cure rate, so it isn’t the most feared cancer by any stretch, but recent surveys have shown that multiple basal cell instances put a person at higher risk of more dangerous skin cancer. This fact has not been lost on life insurance underwriters who, as recent as five years ago, didn’t rate basal cell at all, not even multiple instances. Now, while most companies will let a single instance slide, multiple instances may bump a person to standard rates.
Squamous cell carcinoma is almost identical to basal cell except in one aspect. Basal cell, in the 5% of cases where it becomes a problem, generally goes deeper into the skin and can sometimes reach the bone, but it doesn’t spread to other areas of the body. With squamous cell, the cure rate is essentially the same, about 95%. The issue with the other 5% in this case is that squamous cell can spread to other parts of the body. Underwriting on squamous cell will depend on the stage and grade and if it has spread. If it is a low stage and grade with no spread, often preferred rates can be done if there is a single instance. Multiple instances would be standard rates best case.
Melanoma is the last of the skin cancers and although it represents only a few percent of the total skin cancer occurrences, it is responsible for 75% of the deaths. Underwriting melanoma is a whole different ballgame. With a low stage and grade melanoma, the best case would be a rated policy (higher than standard) when you’ve reached one year post treatment. That is best case. Remember, with cancer it is all about stage and grade. I’ve seen melanoma history get no better than standard 10 or more years after treatment.
Bottom line. Skin cancer is not an issue that you want to tackle without an independent agent. Most life insurance companies will be more cautious than I have described.
May 28th, 2008
