Archive for November, 2009
I’m often asked whether being declined for insurance, or highly rated, will influence how another company looks at a new application. The answer is truly an emphatic NO!
Each company has their own underwriting criteria and their own philosophy and their medical director has their own opinion on health issues and what it all turns out as, is very little agreement between companies on how, especially harder health issues, should be viewed.
A case in point is a case I just shopped where a client had a gastric bypass within the past year and his weight had stabilized only a few months ago. I truly shopped this expecting a lot of declines, postpones and highly rated offers. I wasn’t disappointed in those areas, but was amazed when one company came back and said “possible preferred plus”. Flying in the face of the most common logic with obesity and gastric bypass, this company decided that since even adding back in half of the weight lost kept the person within preferred plus build criteria, they felt comfortable quoting it. I went back for a second opinion and they stuck with it.
I have a substantially more complicated case I’m working on that involves melanoma, border line diabetes, pulmonary function issues from 25 years of smoking and some cardiac issues that showed up on an echocardiogram. This case was approved at a table 7 by Prudential and was subsequently shopped and appears it will be approved at a table 2 by United of Omaha.
Bottom line. Most companies really don’t care what other companies think. They live by their own rules and guidelines.
November 30th, 2009
Like smoking, another issue that gets a lot of interest in life insurance but very little follow through, is weight.
I’ve offered several posts concerning companies that will underwrite obesity at fair rates. I’ve also mentioned frequently that what is fair for someone 6′1, 394#’s is not going to be the same as what is fair for someone 200#’s lighter. These companies are underwriting known mortality risks when they choose to make offers on those who don’t even fit on most companies build charts at all.
For whatever reason, smoking and obesity are two areas where I see customers who want the insurance but decide nothing is better than something when they see the price on what they would like to have. By this I mean that, for instance, a person would like to have $1,000,000 worth of life insurance. When they find out that it doesn’t fit into their budget due to the premium charged for smoking or obesity, the opt to do nothing rather than look at $500,000 or $250,000. It’s kind of like the kid that takes his bat and ball and goes home because he can’t get what he wants. So he goes home and then he has a bat and ball and no one to play with. Somehow that doesn’t work out to be a good deal.
In life insurance, deciding that nothing is better than something may work for you, but how’s that going to work out for your family? Do you have some sense that your family is better off with nothing than $250,000? Do you really think that it would make sense to your wife that because you couldn’t afford $1,000,000, you should just go without any protection for her and the kids?
We can successfully get offers all day long for those who can’t get it somewhere else due to build, but we can’t change that all or nothing mentality.
Bottom line. Keep in mind that I have never had a widow call me and gripe that their husband left too little behind. The only time I hear complaints is when they find quotes or application paperwork that was never followed through with. Don’t break the bank. Get what you can afford and your family will be glad you did.
November 30th, 2009
I’ve truly gotten a sense of what a love/hate relationship is all about with West Coast Life. They are, in so many areas, one of the best companies in the business for fair and flexible underwriting. I love that since most of my clients need above average underwriting.
On the other hand I am truly disgusted with their new conversion product that is only guaranteed 10 years. The whole idea of conversion is that it is the life raft that saves your rear when you become uninsurable. It offers you a way to keep life insurance in force on a permanent basis. It is the frosting on the term insurance cake that makes it work for so many and for West Coast to scrape the frosting off the cake and screw, yes screw their loyal customers is wrong on so many levels.
I had a client call today who wanted to convert her West Coast term insurance policy. She had a 20 year term and bought it 8 years ago. She is paying $77 a month for it. West Coast will convert that “without evidence of insurability” to a universal life policy that is guaranteed for 10 years for $260 per month. So she has 12 years at $77 or 10 years at $260. What bone brain thought that was a good way to structure their conversion program?
I’ve talked to people all up and down in the company and the excuses are just pathetic held up against the damage this can cause to their customers. It’s led me to warn term customers about the potential calamity down the road if they choose to go with West Coast Life or Protective Life, their parent company.
Bottom line. West Coast Life’s underwriting doesn’t suck, but if you stack them up against any other company out there with a conscience, well, they suck because they don’t have one.
November 24th, 2009
I watched Dennis the Menace the other night and early on in that film it was clear that Mr Wilson would have preferred to have $100,000 in his pocket and no Dennis as a neighbor. That’s probably a bit harsh, but the answer as to why he couldn’t have that is called insurable interest.
Insurable interest is one of those rubs that I get to deal with every once in a while when someone calls and wants to get quotes on their aging mother for $250,000. They are inevitably put out when I ask them what the purpose of the insurance is. Sometimes it is genuine and clear cut. Mom owes a quarter of a million on her house and wants to leave it debt free to her children.
Other times it’s way murkier. Mom is poor and they don’t see any inheritance coming (like it’s a right for them to have one), so they want to create an inheritance by insuring Mom. The issue with insurance companies is called insurable interest. The insurable interest question is “what loss occurs upon Mom’s death that requires $250,000 of life insurance to make the family financially whole again?”
We all know that there are plenty of policies that have been put in force over the years with no insurable interest. One of the questions that swirls around the whole life settlement issue is whether an investor truly has insurable interest when they buy a life insurance policy from someone who wants some cash and sells theirs, but that’s a subject for another post.
The question in my mind with a lot of these “Mom” deals is, down the road is their heart going to be with Mom or with that life insurance policy? Suppose they buy a term insurance policy and it is coming to the end of it’s guaranteed level premium period. Are they going to be thinking about all the money they’ve put into that policy and the possibility of striking out or will they just be glad Mom is still around?
Bottom line. Life insurance is not and should not be a means to profit. It was never designed for that and never meant for that. Mr Wilson didn’t have an insurable interest in Dennis and you don’t have an insurable interest in anyone unless their death causes you a financial loss.
November 23rd, 2009
When A doctor says you’re doing just fine or you don’t need to worry about this or that, they really mean it. I suspect that in the short term scheme of things they may even be right most of the time.
But let’s not mix up a short term prognosis with an adjustment in your mortality experience. After all, if you’re 50 and can expect to live to be about 80 if you’re healthy, what is a doctor going to gain by letting you know that your health condition, on average, is going to shorten your life span 6-7 years. That is definitely not in the doctor’s handbook on how to win patients and influence people.
But it’s a problem when you are applying for life insurance. When a doctor poo pahs your health problem because he will likely be retired before you die, he sets you up with the expectation that the rest of the world will see your situation from the same frame of reference and treat you as if “there is nothing to worry about”. And I’m not saying that you should worry. Doesn’t help anyway.
What I am saying is that when a life insurance agent tells you that your A1c of 6.9 isn’t pre diabetes for underwriting purposes, you need to understand that everyone who has a 6.9 a1c is looked at the same by life insurance underwriters. It’s diabetic. They really don’t care how your doctor presents it to you.
I know I rant about this quite a bit and I really don’t know what the answer is. Being people like we are, we are generally going to take the opinion we like most and base our expectations on that. If the doctor says you don’t have anything to worry about then it’s normal to expect that insurance companies will treat you like gold. If your doctor says you’ll never be able to get life insurance because you’ve had a heart attack, then it’s normal to put your stock in a life insurance agent who has experience that disproves that.
Bottom line. Know that doctors and life insurance underwriters aren’t evaluating the same part of your life. Doctors are in the present and underwriters are looking at the distant future. Doctors are evaluating you alone and underwriters are looking at how your condition plays out on average within a certain risk pool. The real bottom line is to keep an open mind when your insurance agent’s opinion doesn’t seem to match up with your doctor.
November 20th, 2009
I think it would be accurate to say that we help a lot more people with health issues than people who are just insanely healthy, but let me be very clear, we do a great job helping the insanely healthy as well.
I had a call from a company executive today wanting quotes to replace some group coverage that is going away. After going through the health interview he mentioned that he had been reading this blog (see, someone reads it) and realized that he, being very healthy, really didn’t seem to fit into what he perceived as our average client. He wanted to know if we could help him even he was kind of unchallenging.
Fair question. The truth is that the same things that set us apart in being able to help those with diabetes or bipolar disorder, set us just as far apart in helping completely healthy people.
There is a common misconception out there that if you’re healthy you can go anywhere and you will automatically get the best rate available. That should be true, but it’s not. You can run into something as innocent as an agent that doesn’t happen to be appointed with the company that offers the best rate. You can also be the victim of a big on line agency who steers the bulk of their business to the companies that pay big bonuses for big production. Unfortunately that skips right past some of the best rates that come from companies that never have and never will play that game.
And it is my belief that our service sets us apart no matter what your health is. We treat every application with the importance that it deserves given what it means for you and your family. We stay in touch regularly during the application process and make sure all questions are answered before we help put your policy in force. And then we stay in touch once or twice a year for the life of your policy just so no question ever goes unanswered and also so that you can have the confidence that we’re still here. Same people. Same phone number. Same email.
Bottom line. Those things that set us apart really shouldn’t. Too many life insurance agents think, believe, that it is all about the sale. They push. They use closing techniques. Then they cash their commission check and you never hear from them again. So, really, if you’re healthy it’s OK to contact us for your life insurance needs.
November 19th, 2009
Term life insurance is a product that is sprinkled with gold nuggets that make it so much more than it appears on the surface. The great news is that the nuggets are part of the policy and are not added on at an extra cost.
One of those nuggets that I often take for granted that everyone is aware of is the fact that the death benefit, that $100,000 or $1,000,000, that you are insured for will be delivered to your beneficiaries income tax free. Unlike just about any other kind of cash windfall that a family experiences, the government keeps their hands off of it.
Even better, the company isn’t going to hang on to any unused premium. Say you are paying $1200 a year for your $250,000 term insurance policy and you pass away a month after paying that annual premium. The company is going to pay the death benefit and refund $1100, the unused part of the premium. In addition to that they are going to pay interest on the death benefit from the date you file the claim until they settle it. The interest thing is generally not that big a deal because most claims are settled in 7-14 days, but if the claim falls in the 2 year contestability period it may take a few months to settle and the interest can add up.
Another gem in term insurance is the conversion option. In a nutshell this option or privilege allows you to convert all or part of your policy to permanent coverage without evidence of insurability. Let’s say you take out a policy in your 40’s and are in perfect health, approved at preferred plus rates. Then in your 50’s you are diagnosed with and survive colon cancer. This would make the cost of getting a new term policy completely prohibitive, if you could get approved at all.
With the conversion option you are still a preferred plus risk if you choose to convert to a permanent policy. While the cost of the insurance, once converted, is going to be higher than your term insurance was, it is the magic bullet that will keep you insured when you truly can’t qualify for new insurance.
One last piece of gold in your policy is the accelerated death benefit rider. This allows you, if you are terminally ill, to take usually up to half of the death benefit prior to your death for whatever needs you might have. It could be to pay the mortgage because you aren’t able to work or pay medical bills. It could be to do something special with your spouse or family that you wouldn’t otherwise be able to afford. Upon your death the balance of the policy is delivered to your beneficiary.
Bottom line. Life insurance is all about lifting burdens from families that have suffered a major loss. The more gold nuggets you can pour out with that blessing, the better.
November 18th, 2009
In Job 12:11 it says “Does not the ear test words, as the palate tastes its food?” When a life insurance agent gives you a quote that you know sounds a little too good, do you question it or set yourself up for disappointment by choosing to believe something that, deep down, you really know isn’t accurate?
It’s OK to tell an agent to back up their quote with something from the company they are suggesting. Two things I share fairly often are copies of company underwriting guidelines and copies of underwriting trial quotes that show to a client that I’m not just throwing out low ball quotes in hopes of snaring their business. The quotes are based and formulated from facts and backed up by the company.
Let’s pick this apart a little. Say you have presented your health history to an agent and you are treated for high blood pressure. The agent quotes the best rate class with Savings Bank Life, one of the most competitive companies out there. The approval, if the blood pressure is well controlled, will actually come back at preferred, their second best rate.
Most customers I’ve talked to have heard or believe that high blood pressure treatment will affect their rate, so if you had questioned this agent up front, he or she would not have been able to back up the quote with either SBLI’s underwriting which states for their best rate class, “Blood Pressure: No treatment, past or present, 135/85 up to age 60, 145/90 age 61 and over”. They certainly would not have been able to produce a trial or quick quote from SBLI underwriting saying that blood pressure treatment is OK at their best rate because it clearly isn’t.
If you had been fortunate enough to have an independent agent who knew their underwriting they could have quoted Banner Life, “Blood Pressure: Currently well controlled with or without treatment, with no readings in the past two years greater than 136/86″, or Minnesota Life, “Blood Pressure: Must be better than 135/85 with or without treatment”. Both companies distinguish themselves in simple underwriting by offering their best rate class for treated blood pressure, where the competition is a full rate class behind, 20% to 30% higher.
If there is the chance of a 20% to 30% error on something as simple as blood pressure treatment, consider the chance for egregiously wrong quotes if an agent doesn’t consult with underwriters before quoting something like arrhythmia or type 1 diabetes.
But the point, and I should get back to it, is that you as a life insurance customer are completely justified in asking an agent to show you some kind of proof that, in the absence of some information neither of you knew about, they can come through with the rate they quoted. Really, we usually know if the rate we’re being quoted is just a little too good and while it might feel good to think we might get those rates, it feels bad when we don’t and especially bad when we find out that the agent should have known that to start with.
Bottom line. The proof in life insurance is in the approval, but before you commit to an agent or a company there is a couple of ways to get pre-proof. Test the words of the agent.
November 16th, 2009
So, you applied for life insurance and have been postponed or declined because you didn’t complete some, for instance a sleep study test your doctor recommended! Want a second opinion?
Don’t waste your time. You’ll get the same answer at the next insurance company. They want to know if you have sleep apnea also and until you either follow through with that recommended test or change doctors and actually have your new doctor provide reasons why the test wasn’t necessary in your new medical records, you’re stuck.
There is a lot being made these days about unnecessary testing. There’s plenty of it happening and a person should be able to put their foot down and say they aren’t going to take a test…..if they know that medically it is unnecessary. That’s the problem with most of us. We don’t want to take a test, usually because of cost, but we’re not doctors and we can’t factually justify why we shouldn’t take that test. It takes a doctor’s opinion to undo a doctor’s recommendation.
You can go back to the original doctor and just have a frank discussion, which you probably should have done to start with, and say, “Hey, tell me why I have to do this and what benefit I will get from me and is it really necessary, or put in my records that it isn’t necessary”. Tell them right up front that your decision not to do the recommended testing is wrecking your chances of getting life insurance so you need to know if it’s just the doctor’s want or is it really the doctor’s need.
You can also go to a new doctor, but weigh that can of worms before you open it. Starting with a new doctor isn’t cheap and it may take the new doctor a lot of testing just to bring him up to speed on where you were when the first doctor made their recommendation. And then they may recommend the same test.
Bottom line. Any time your doctor recommends anything, whether a test or a medication, if you have an issue with it, take it up with them right then and there. Don’t wait until you forget they ever said it. It’s going to be in your medical records and it will come back to bite you.
November 13th, 2009
The most common type of cancer among men and women is skin cancer. By far the majority of those cases are rarely life threatening types like basal cell carcinoma or squamous cell carcinoma.
The least common of the three is the most feared and has one of the highest mortality rates of any kind of cancer, melanoma. While history of the first two types is pretty easy to get good life insurance rates on, when melanoma jumps into the picture, well, the picture changes.
Like all cancer the underwriting gets tougher as the stage and grade of the cancer get higher. The best possible situation whether it is melanoma or breast cancer is a stage 0 insitu where the cancer is fully encapsulated. I recently shopped a stage 0 melanoma and got two offers better than standard on a cancer diagnosed less than a year prior.
Generally with anything higher than a stage 0 there would be a minimum one year post treatment before any offer was made and depending on the stage and grade, it could easily be a highly rated policy for several years after that. That highly rated period depends on the type of cancer as well as the stage and grade.
Bottom line. With this case we are headed for final underwriting and it appears our trial offer will be met and a standard plus rate offered. If you have a history of melanoma and want to see what kind of rates are available, make sure you have the stage and grade memorized and even better, a copy of the pathology report for your agent to work with. You may be pleasantly surprised.
November 12th, 2009
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