Ed Hinerman On Life Insurance

Just When It Couldn’t Get Any Better!

Family history is one of those issues that just isn’t much fun to explain and frankly, from a life insurance underwriting standpoint, is a little hard to make a mortality risk case for more often than not.

Now I’ll give the actuaries the benefit of the doubt when, let’s say, a male age 40 is being treated for blood pressure and cholesterol, and maybe he’s a bit on the obese side and his father died in his mid 40’s from a heart attack. I can see the link. I can see how an underwriter can foresee a possible progression in that story.

But when that scenario gets the same treatment as a male age 40 in perfect health whose father died at, say, age 58 or 59 of a heart attack, is that really right? Can’t we give the guy that’s got his health locked in the benefit of the doubt?

Let me clear a few things out of the way before we come back to that. Family history of cancer doesn’t have to be an issue. ING Reliastar doesn’t factor cancer into their underwriting. Sibling family history doesn’t have to be an issue. American General and ING Reliastar don’t underwrite sibling history. The family history of a parent dying of a heart related issue prior to age 60 can be ignored by West Coast Life if the proposed insured is over age 60 or with Genworth Life and Annuity if the PI is over age 65. Those things don’t take exceptions.

Occasionally you can get a guy like the second one I described above some slack if he has had a full cardiac workup to rule out any heart issues. That would be an exception and it is an exceptional day when we can get an underwriter to buy it.

But today I spoke at length with an underwriter with an A+ rated company (different A+ company than the aviation post I wrote earlier) and he said that if a client would qualify at preferred select (best rate class) in all other ways (without a cardiac workup), they will ignore the parent dying at age 58 or 59 of a cardiac event. Small window of opportunity, but it’s huge. With all other companies, unless you can get an exception with a cardiac workup, that would be their third best rate class.

In real numbers! Let’s say the client is 50 and wants $500,000 of 15 year term. At the third best rate class they would be looking at $1100 to $1200 a year for that policy. With the company I am talking about, if that parent died at age 58 or 59, less than $800 a year. That’s not chump change.

Bottom line. Like I said, small window, but…..so many people get shoved into the wrong company over this issue, and they don’t have to. If you fit the criteria above and your agent insists that the third best rate class is as good as it gets, you have the wrong agent.

Add comment February 1st, 2010

VFR Pilots Should Be Looking At New Rates!

As noted last week a major A+ rated life insurance company has broken into uncharted waters by offering preferred plus (best rate class) rates for private pilots that are not instrument rated.

And that’s just the tip of the good news iceberg. It gets even better when you find out that the company is a heavy hitter in the term insurance wars, showing up in the top 10 rates at preferred plus at most ages and term lengths.

To put this in perspective, for a male age 50 who is a private pilot with a VFR rating, with 100+ total solo hours and flying 26-150 annual hours, before the best they could do on a $2,000,000, 20 year term policy would have been through North American at their preferred rate for just under $4600 a year. With this new underwriting available, given all the same criteria a person could end up spending nearly $1000 less per year.

As I said last week, there is obviously an assumption that aviation aside, all other factors would have to qualify for preferred plus as well. That usually isn’t a huge issue for pilots since, unlike the average population, they get regular physicals and health issues seldom get out of control.

So, where does this fit into your life insurance planning? It’s huge so I don’t throw this out fliply. If you are a VFR pilot in good health and meet the criteria above and you currently have life insurance in force, you need a comparative quote. If you can potentially lower your life insurance bill by 25%, it’s not a review you want to pass up. If you don’t have life insurance in force and have been avoiding it because you can’t stand the rates you’ve been quoted, it’s time to act.

Bottom line. It’s rare when a road block to the best rates is removed. We’ve seen it with a few companies that will allow their best rate with treated blood pressure. We’ve even seen it in the past year, albeit with a very limited window, for people with type 2 diabetes. But, absent a flat extra charge, this is a first for the average private pilot.

Add comment February 1st, 2010