Ahh, the less than perfect approval on your life insurance application. The temptation to take your bat and ball and go home and never play again. The desire to get back back at the company by not purchasing life insurance and not providing protection for your family.
Even though most agents are savvy enough to make clients understand that their quotes “based on the information you have provided and are subject to full medical underwriting and are not guaranteed until final underwriting approval”, most clients don’t prepare themselves for the fact that under the scrutiny of blood and urine labs and an analysis of their medical records, they may not end up perfect. They may not have what it takes to get the best rates or the standard rate or whatever rate they were quoted.
Now I’m not saying there isn’t justification for a little anger if you tell the agent you are 5′10″ tall and weigh 240# and they quote you the best rate class. That is either stupidity or bait and switch. They knew that was a standard rate when it came out of your mouth and they just didn’t want to break the news to you then for fear you would run away looking for a second opinion.
But what I’m talking about is when you believe you are healthy and no doctor has told you anything to the contrary (probably because you haven’t been to one) and your cholesterol is 278 on the labs or your blood pressure is 142/95 on the exam. You’re still going to get approved, just not at those juicy rates you had your eye on.
So, don’t get mad. Do the right thing and buy as much 10 year term insurance as you can based on the approved rate class to keep the price down. Then do the right thing and get your cholesterol or blood pressure under control. Then apply again and get the rates you’ve always dreamed of, replace that first policy and come away from the experience smarter and healthier.
Bottom line. Don’t take your bat and ball and go home. Your family needs you to do the right thing whether you like it or not. And remember that you were approved and not declined. A single is better than no hit at all.
October 14th, 2009
There used to be a lot of companies that had published crediting systems that they would use to determine the final underwriting outcome of a life insurance application.
Credits could be earned by anything from exceptional, as opposed to just satisfactory, lab results, or for rewarding those who proactively get annual physicals. Life style and family history also played into those crediting systems allowing an approval possibly a rate class better than what a person might otherwise qualify for.
United of Omaha came out a few months back with what they call a “Fit test”, essentially a crediting system based on medical history and lifestyle. It was designed to reward those who for one reason or another might be in a rated category with a normal approval. The fit test can be used to reduce a table rating by as much as two tables (50%). If a person qualified for a table 2 otherwise due to, for instance, bipolar disorder, the Fit test could effectively reduce their approved rate to a standard rate, a huge savings.
And we’re not talking about Superman criteria to get these credits. Out of 11 questions, 3 yes answers can reduce your rate by one table and 5 yes answers can give up to two table..
Under lifestyle the questions are:
1. Regular preventative medical care and compliant followup?
2. Minimal alcohol use. No more than 2 drinks a day?
3. Life time non smoker?
4. High income or net worth?
5. Preferred or better driving record?
Medical questions:
1. Family history – No deaths from any disease in immediate family prior to age 70?
2. Cholesterol/HDL ratio under 5.0?
3. A negative cardiac workup?
4. GXT exercise performance over 10 METS?
5. Blood pressure treated or untreated below 130/80
6. Preferred or better build?
This is a gold mine. I just shopped a case for the CEO of a company where bipolar was the issue and almost all companies came back at best case Standard table 2, including United of Omaha. The client answered yes to 10 of 11 of the Fit test questions and should get a standard rate, 50% below table 2.
And the unique thing about United of Omaha is that they are disclosing their crediting method to be used in field underwriting (quoting by agents). There is no question going in whether the credits will help or not.
Bottom line. Crediting has always been the right thing to do. Rewarding someone for a good lifestyle and a proactive approach to their health just makes good sense.
October 14th, 2009
