Archive for September, 2008
Well, duh! Of course you do, but the good news is that you don’t have to be breathing all the time. After all, sleep apnea could be loosely described as periods of not breathing during sleep.
Sleep apnea is one of those health issues that life insurance underwriters, from company to company, vary wildly on. Some companies treat sleep apnea as if you’ll never start breathing again, instant decline. They act as if the risk is somewhere between stage 4 colon cancer and sky diving without a parachute.
On the other end of the spectrum, we have been very successful at getting best rate class approvals for people with mild to moderate sleep apnea if there aren’t any other risk factors involved. Even severe sleep apnea is getting placed at better than standard rates.
So, are underwriters really concerned that someone will stop breathing and not start again? Well, no! The truth that drives sleep apnea underwriting really revolves around the fact that during those periods of apnea, the blood oxygen level drops and sometimes blood pressure increases. These strains on the heart can lead to cardiovascular issues and possibly a heart attack.
There is also the very real risk that a spouse may strangle you because, to put it gently, there is snoring and than there is sleep apnea snoring. The difference is not subtle and with sleep apnea, especially severe sleep apnea, there is very little break from the onslaught.
Underwriting becomes more difficult when there are already risk factors involved such as obesity or high blood pressure. The more risk factors you pile on that all sort of lead in the same cardiac related direction, the tougher it is to get the best rates. In most cases though, with a good independent agent, life insurance can be found and approved.
Bottom line. As with all health issues, life insurance underwriting of sleep apnea is all about compliance with treatment, control of the problem and if you have confined the problem to just one issue.
September 30th, 2008
This is mostly a rhetorical life insurance quiz for guys. There are no guarantees that you will be approved for life insurance at all, although most are. And there certainly aren’t any guarantees that you be approved at the rate class you applied for.
All of us, except me, really want and kind of expect to be approved at the best rate class. I’ve kind of given up on that best rate class. I got it once several years ago, but age and a few health issues have moved me down the food chain a bit. You’ve seen the commercials. “A 45 year old man can get $500,000 of term insurance for just $27 per month”.
If you’re fast enough and if the people doing the commercial were honest enough you would catch the fine print going something like, “for a 10 year term as long as you fit into our build chart, don’t have any family history of heart disease, cancer or diabetes, have never seen a doctor for anything other than a cold or flu, don’t take any prescription medications, have never been arrested and have a good driving record, don’t have any hobbies more dangerous than putt putt golf, don’t travel to foreign countries that don’t love Americans (that would be none this week), and don’t drink too much or do drugs”.
There are a lot of people who fit that criteria and get the best rate. It is not, as some like to say, a Superman rate. It is simply held out there for those who are healthiest. So what happens when you have your heart set on $27 per month and your cholesterol is too high or your family history prevents you from getting that approval?
Well, a lot of people, especially guys, like to take their bat and ball and go home. They would literally rather go without than pay a rate that is higher than they think they deserve. This has always seemed like such a bizarre stance to me. “I can’t get the best rate, so if I die I would rather my wife has nothing!” That just seems a bit on the childish side to me.
Why not, if you had your heart set on $27 a month for $500,000, and you get approved and all that $27 will buy is $400,000, take it. That’s taking responsibility by the horns and letting your loved ones know you love them more than you love yourself.
Bottom line. Something in force is always better than nothing and if it’s a health thing like cholesterol that kept you from getting what you wanted, put as much as you can in force and work on that health issue. Far better to work on health things with life insurance in force than not.
September 29th, 2008
A few years ago I wrote about my Dad’s diagnosis with bladder cancer, a serious stage 4 cancer. In the words of the oncologist, an aggressive and dangerous cancer.
What I didn’t share at that time was the fact that his family doctor had treated symptoms as if he had a bladder infection for months. Round after round of antibiotics didn’t do anything and eventually, with some pushing and shoving from family members, he was referred to a urologist who diagnosed him with cancer. That was nearly two years ago and with radiation and chemo and more than a little prayer, the cancer was pushed back and he has had a very good last year and a half.
Recently Dad started having abdominal discomfort and stomach pain and his family doctor once again went after the symptoms with pain meds, acid reflux medicine and anti nausea medication. This went on for nearly a month with no change, in fact he was getting worse, losing weight and becoming weaker. Again the family stepped in and asked the oncologist to help us determine what was going on.
They scheduled a CT scan with the idea of seeing if there was something obvious or referring him to a gastroenterologist in the absence of that. What they found was that the cancer has started growing again and was actually causing all of the symptoms that the family doc was treating as if Dad had acid reflux.
We will find out today what courses of action are available, but one course of action has become clear. Dad and the family have lost all trust in this doctor who feels too important to refer patients to specialists, who thinks treating symptoms in the face of all logic pointing in different direction, and he won’t be in the picture any more.
Bottom line. This isn’t about life insurance and it isn’t about all doctors. What I hope to bring to the table is the thought that families and patients often know that treatment isn’t headed in the right direction, but don’t want to challenge what is going on. In retrospect I wish I had challenged more and more quickly. I wish we had dumped this doctor in the unemployment line two years ago. Once again my family is turning to God and we would covet your prayers in this situation.
September 26th, 2008
If anything, I hope I’ve driven home the point over the years that life insurance underwriters look at any health issue not just from a pure mortality standpoint, but from a compliance and control point of view. If you look at the overall bucket of potential insureds, some of the old school underwriters will still look at it from the angle that all people with hypertension should be treated the same.
But the key for those underwriters who truly analyze each case is compliance, does the client truly follow the doctor’s instructions and control, how well is it working? The truth is that while the dynamics of different health and mental issues may differ, the end result given an underwriter who isn’t trapped in the old school box of “everyone in the same bucket”, can vary dramatically in favor of those who take their issues seriously and strive for control.
A few examples of companies and underwriters who are acting outside the industry box with hypertension are Banner and Minnesota Life. While no other companies will allow their best rate class if a person is treated for blood pressure, these two leaders do just exactly that as long as control is demonstrated. Given good control most companies will only bump these clients to their second best rate class, but that is usually a full 20% higher than the best class. That can mean hundreds of dollars a year depending on age and policy size.
More and more companies are allowing that kind of treatment with cholesterol, but there are still plenty of old school companies and underwriters who believe that people should be penalized for treating their cholesterol, even when that treatment is preventative or if it’s for a borderline issue.
While certainly more complicated in what it takes to call bipolar disorder controlled, there are a few companies with underwriters that understand that the bucket approach is completely inappropriate. There are people with bipolar who are completely functional, stable and far from being a mortality risk.
Bottom line. Whatever your health challenge, if you believe it to be well controlled, if you believe that you are truly in charge of it and not it of you, seek out the independent agent who can capitalize on that for you. In many cases there is simply money that doesn’t need to be spent.
September 26th, 2008
Our family is going through an issue that, after some thought, I’ve decided is worthy of discussion in the context of life insurance. Like the breast cancer I’ve discussed that my mother is just completing treatment on, while I’ll use my parents as an example, they are just that, an example of a problem that is pervasive and can absolutely impact your ability to get life insurance at the best rates possible.
They have outgrown the expertise of their longtime general practitioner and because of that they are not getting the kind of follow up that an insurance underwriter would like to see in order to consider someone for better rates.
When your medical life becomes more complicated, whether that is from gastro intestinal issues, sleep problems or even high blood pressure, quite often your primary care doctor will give you a referral to a specialist. The problem arises when they don’t refer you and just treat symptoms even though they have stepped outside their area of expertise, general medicine.
This complicates things from a life insurance standpoint because underwriters can see that you are not getting the proper advice and treatment. They can see that the doctor is prescribing medication and that they aren’t doing the proper followup tests. An example from my own family is the prescribing of Coumadin with the followup blood tests, the PT-NR, that should be done monthly to monitor your blood clotting ability. The doctor prescribed the medication and hasn’t been doing the followup tests. If my Dad was younger and applying for life insurance, he would be declined simply because he wasn’t getting the treatment and followup he needs.
My Mom has always had a hard time sleeping and the same GP, rather than referring her to a sleep specialist, has chosen to treat her himself. Unfortunately that treatment has been a real hit and miss, try this and try that type of approach. He has gone through several medications and some of those were inappropriate for someone her age. A life insurance underwriter would decline her because of this inconsistency.
There is simply a time when you, as a patient, need to realize that your doctor has stepped out of their box of expertise. It can drag a medical problem on for too long. It can make it worse and it can impact your ability to get life and health insurance.
Bottom line. This isn’t about your doctor and the relationship you’ve had for years. It’s about the care you need and deserve. It’s about resolving health issues in an expedient and professional manner.
September 25th, 2008
I understand that most people go and stay where they are the most comfortable. That’s why so many people end up buying overpriced life insurance through their auto and homeowner’s agent, agents that are captive to companies like Farmers, State Farm, Farm Bureau and Allstate.
An independent agent can offer two things that will set them apart in the life insurance arena to such a distance that you will wonder where the auto and homeowners guys get off even claiming they sell life insurance.
First, and I have documented this in previous posts, the rates available through life insurance companies can be as little as half of the premium you would pay for comparable coverage through one of the Farm companies. The agents don’t have a choice. That is their product and I honestly believe that most of them don’t know any better and believe that their rates are just fine. After all, if they weren’t just fine, why would people be buying them. A case I mentioned just recently with Farm Bureau was on a young couple that was paying $51 a month for both of them for $100,000 of 10 year term on each.
This couple has two very young children and to start with, 10 year term insurance isn’t the right product. They needed at least a 20 year term to make sure things are covered until those kids grow up. We were able to get them $250,000 of 20 year term each and they are paying $33 a month total. So, numero uno, independent agents have the best prices available to them.
Second is underwriting. The folks underwriting life insurance at auto and homeowners companies are very likely told not to accept any risk, perceived or real. So even the smallest of issues is blown into an underwriting nightmare. I worked with a woman over the weekend that was told by her State Farm agent that at her age and her health, she should probably just forget about getting life insurance. She is 66 and the only health issue is borderline high blood pressure. She is well on the way to getting the coverage that she really needs at a very good price.
Bottom line. It is the independence that makes the difference. If your agent hasn’t got a choice of companies and and variation of underwriting guidelines, they are stuck hoping you don’t notice just how bad their products are. Shop around.
September 22nd, 2008
With the federal bail out and takeover of AIG a few days ago it is now pretty apparent that assets from the insurance giant will be up for sale soon. With the terms of the bailout loan only being two years in length and at an interest rate of 11.5%, while there won’t be a fire sale mentality, there will most certainly be very little foot dragging.
The good news for the government and AIG is that apart from their financial products unit, the branch that insured mortgages, there are some very healthy and profitable parts of the company. There will be some very healthy and wealthy companies that will be looking seriously at purchasing, for instance, American General Life Insurance.
For all of those policy holders with guaranteed products through American General, their term insurance products and their universal life products with external no lapse guarantees, the sale of the company will have virtually no impact other than who their premium checks are made out to. By law all of the guarantees that are part of the American General policy will remain intact with the new company.
Where the rubber, all I’ve said over the years about non guaranteed universal life and whole life policies, will meet the road will be in this sale. Because many of those products have no guarantees or short guarantees, they will be subject to rate increases when the guarantees run out and I think it is fair to say that those rate increases aren’t something that might happen. They will happen.
The good news will be for those who still have some guaranteed time left and even better for those that are still guaranteed and have cash value. If you work soon with an independent agent to look at alternatives, you may be able to replace your current policy with a fully guaranteed policy at potentially a better rate than you are currently paying. If you have cash value it can be rolled into the new policy tax free through a 1035 exchange.
Bottom line. In a few years this will be just another financial footnote. I can say unequivocally that none of my customers will be impacted by this as they all have guaranteed products. If I were king I would ban all non guaranteed products and force those who want to play with their money to do it outside of the scope of their family protection.
September 19th, 2008
I think you can count on seeing this type of stance from more and more companies. Protective sent a memo out to agents today stating, “Protective Life Insurance Company will not issue life insurance policies planned to be re-sold in the secondary market, often referred to as Stranger Owned Life Insurance (SOLI) or Investor Owned Life Insurance (IOLI).
These types of secondary market arrangements are not within our underwriting criteria, and we will return any applications for policies that are either directly or ultimately intended to be part of such an arrangement. If such a case is inadvertently underwritten, upon our discovery we may refund the premium and rescind the policy.”
Bottom line. They aren’t the first major company to take a hard line on discouraging life settlements and you can bet they won’t be the last. Let’s hear it for prudent and reasonable.
September 18th, 2008
In a post yesterday I mentioned that the course of treatment for breast cancer that my mother is just completing included six weeks of radiation therapy. My dad forwarded an article to me today from the clinic where she is being treated that talks about a more intensive and compacted radiation therapy used for patients when the cancer is a low grade, insitu, type of cancer that hasn’t spread.
From a life insurance standpoint it would bring the same result, a likely standard rate after one year.
Bottom line. Again, with detection and treatment options expanding all the time, survival and insurance rates will continue to improve. That and I’ve got my dad working for me for free. What a guy!
September 18th, 2008
There seems to be a fairly prevalent lack of understanding about term insurance, whether it’s the right product and if it is, how to determine which term is best for you. So, a little term 101. Hopefully I won’t leave everyone scratching their head.
Generally speaking, almost all life insurance is “need specific”. In other words you don’t buy life insurance just because, but rather to ensure that a certain need or possibly more than one need is financially met if you happen to pass away while that need still exists. We buy life insurance because we have children and we want them to be able to have all of the advantages of our income even if we’re not there to provide it anymore. We buy life insurance because we love our wives and know that whether we are a one or two income family, the loss of our income could be devastating. We buy insurance to cover debt because the responsible thing to do is not leave someone unpaid if we pass away.
But, there are very few needs in life that go on forever. There are very few life insurance needs that can’t be covered appropriately with term insurance.
What about those kids? If you’ve just had your first child your instinct might be to get a 20 year term. I’ve always been of the opinion with my own insurance that carrying life insurance with the idea that I want to make sure they get to a point of being able to take care of themselves is the goal. I figure if I have insurance that will last until they have at least a bachelor’s degree, I’ve done the responsible thing. So, when that first child comes, I would probably recommend a 30 year term, especially if you expect to have more than one child.
What about my wife? I carry enough life insurance at staggered term lengths, so that it decreases over time, that my income will be replaced and she will likely never have to rely on our assets if I die prior to retirement. I love her and consider her future to be very much my responsibility.
What is the right term length? That’s a question that you really may need to wrestle with. The right term length provides coverage until the need is gone. If the need goes away earlier than you expected, you can always cancel the insurance. There’s no penalty for that. I would say that if you’re really a little uncertain, if budgetable, it is always prudent to take out a longer term. For instance, if you have about a 10 year need but it might go 11 or 12, take out a 15 year term. It may seem like overkill now, but I guarantee it will beat what happens if you take out the 10 year term and at the end of the term you do need it longer.
Is term insurance right for you? Almost always the answer is yes. With the exception of estate preservation uses, permanent coverage is almost never really needed. If there is a permanent need, use universal life with a no lapse guarantee, a cashless universal life. Never use cash value whole life or universal life.
Bottom line. Determining if term insurance is right for you is pretty easy. Is there a point when the need will be gone? The right term length may take a little more thought, but don’t let it bog you down and keep you from applying. You can change the term during underwriting and honestly, better to have something in force even if it’s the wrong term length. Then you’re covered and have time to work on getting it right. If you have more than one need, don’t be afraid of carrying two or more policies of different lengths. It makes more sense than carrying insurance longer than you need it just for the convenience of having one policy.
September 18th, 2008
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