Ed Hinerman On Life Insurance

Does Life Insurance Underwriting Get Tougher At Higher Amounts?

Occasionally when I am doing an interview to determine what rate class a person will fall into and what company will be best for them, I am asked if they will look less critically at the health issues if they ask for a smaller amount.

This often comes as questions like, “What if I apply for two $250,000 policies with separate companies instead of $500,000 with one company?” The thinking, and it has some logic to it, is that if a company is exposed to less risk maybe they won’t look at the health history or another issue as critically. That could end up with this logic, rather than a large policy approved at a standard rate, two smaller policies might be approved at preferred rates.

Unfortunately for the life insurance shopper underwriting doesn’t work that way. The truth is that while a company may do more tests and more intensive scrutiny of medical records at higher amounts, if a person has elevated liver function, high cholesterol or problematic family history, the company will award the same rate class whether the face amount is $100,000 or $10,000,000. If that weren’t the case then everyone with health issues would be buying multiple small policies rather than the amount they need in one policy.

I mentioned that the underwriting requirements do get more stringent at higher amounts. Here is a standard table of requirements starting with A being children under 18 at lower face amounts to H, I, and J where the requirements are for older ages and high face amounts. Actually they aren’t in exact order as A, B and E are for applicants under age 18. Note that none of them require a full blood draw.

A Non-Medical
B Paramed, Urinalysis, Attending Physician Statement
C Paramed, Urinalysis, Blood Profile
D Paramed, Urinalysis, Blood Profile, EKG
E Paramed, Urinalysis, Attending Physician Statement, Dried Blood Spot
F Paramed, Urinalysis, Attending Physician Statement, Blood Profile, EKG
G Urinalysis, Blood Profile, EKG, Physician Exam
H Urinalysis, Attending Physician Statement, Blood Profile, Physician Exam, Treadmill EKG
I Urinalysis, Blood Profile, Physician Exam, Treadmill EKG
J Urinalysis, Attending Physician Statement, Blood Profile, Physician Exam

Bottom line. While the up front requirements may differ, the results are all measured the same. Again, high blood pressure is high blood pressure whether the applicant wants a modest amount of insurance or tens of millions.

Add comment August 25th, 2008

An Apology To Zander Insurance, Dave Ramsey!

For other reasons than the flurry of life insurance related exchanges with the Zander Insurance Group last week, I was almost crushed by my own lack of humility and my own pridefulness.

When I left church on Sunday, as so often happens, I had heard the word of God and it seemed to be aimed straight at me. I had somehow allowed myself to let my pride take over ownership of God’s gifts and along the way I had shelved my once humble self.

After much prayer I want this morning to apologize to Mr Zander and to Dave Ramsey for boasting to whomever would listen that Zander was wrong in it’s approach to quoting life insurance while I was of course, right. I was arrogant and prideful and far from humble, all things that the God I serve demands of us.

I apologize for insinuating that Zander Insurance isn’t doing what they believe is right. I apologize for insinurating that they don’t do a good job for their clients and I apologize for my arrogance through the whole exchange. Our businesses are not right and wrong. They are simply different and I ask for forgiveness for my attitude. It won’t happen again.

Bottom line. God tests us and so often we fail. In the course of that failure we often hurt people we know and love and people who just happen to be in the way. My Lord Jesus has promised to accept repentance and admission of sin as a new start. I pray that from this day forward I will truly have the heart of a humble servant and not allow my own pride to take ownership of God’s blessings.

1 comment August 25th, 2008