That’s a life insurance question that’s easy to quantify in numbers. At age 57 if I wanted $500,000 of 20 year term insurance and I qualified for the best rate class, preferred plus, I could expect to pay $1840 annually, about $161 a month. If for some reason I was qualified for the second best rate class, a preferred risk instead, the price would be $2160 a year, $189 a month.

So, we know there is a little more than $6000 at risk over the 20 year term depending on the rate class, so what is it that makes you preferred plus or preferred? For that let’s use a pretty middle of the road underwriting guide from North American Life.

For tobacco users, specifically those who smoke cigarettes, to qualify for preferred plus you have to have been a non smoker and not used any tobacco or nicotine products in the last 5 years. For preferred rates that period would be reduced to 3 years. So, if someone purchased life insurance after being a non smoker for 3 years, it would be worth shopping and possibly either replacing that policy when you get to 5 years or, if the company policy allows it, getting a rate reconsideration after you reach that 5 year mark.

Family history is a big factor. Generally companies want to know about your immediate family, mother, father and siblings and whether there has been any occurrence of or death from cardiovascular issues or coronary artery disease, or cancer. For preferred plus most companies require that there have not been any occurrences (even if they survived) prior to age 60. For preferred most companies drop siblings from the guideline and deaths prior to 60 are the benchmark rather than occurrences.

Blood pressure and cholesterol are two very common reasons for rate increases from preferred plus to preferred. For most companies, even if well controlled, being treated for blood pressure is enough to bump you one rate class. If not being treated there are thresholds that need to be met on the exam and with some companies also for the last two years in your medical records. An example would be for preferred plus they want an average of no more than 135/85. For preferred it would be higher, say 140/85.

Again, please keep in mind that these are North American Life guidelines and are middle of the road. Some companies are more liberal and some more conservative. It’s up to your agent to find the company that best fits your situation.

For cholesterol companies generally look at total cholesterol and the cholesterol ratio (total cholesterol/HDL). For preferred plus North American wants to see a total of no more than 220 with a ratio of no more than 4.5. For preferred the total can be 230 with a ratio of 5.5.

Other than the two minor forms of skin cancer, basal cell and squamous cell, any history of cancer will likely preclude preferred plus or preferred rates. The same is true of heart disease or cerebrovascular disease and diabetes. Any history of alcohol treatment would preclude preferred plus rates, while preferred rates would be considered after you are 10 years out from treatment.

Your driving record can affect your rate class with preferred plus requiring no more than one moving violation in the past three years and two violations being allowed for preferred. Airline pilots can qualify for preferred plus rates with full aviation coverage while private pilots would generally be eligible for preferred rates. The private pilot could qualify for preferred plus rates (with North American) but would have to accept an aviation exclusion rider.

There are obviously a lot more criteria or guidelines, but I’ll finish with build, your height and weight. North American is one of the few companies that differentiates between sexes in all rate classes. A lot of companies will have separate weights for men and women in the preferred plus rate class only and a lot of companies simply use a unisex chart, allowing the same build for men and women.

With North American for preferred plus a man 5’6 and 173# or a woman 5’6 and 161# would qualify. For preferred rates a man would need to be 179# and a woman would be 167#.

Bottom line. This is just a snapshot of the little things underwriters take into account when deciding if they are going to allow their best rate class for your policy. There is some unspoken fudge factor with some companies and some companies have written fudge factors such as Banner Life.

Post from: Ed Hinerman On Life Insurance

What’s The Difference Between Preferred Plus and Preferred Rates?

I have a client who is an internal medicine doctor. It is his opinion that the importance of cholesterol levels and their relevance to potential coronary artery disease are overstated.

This is problematic for him (and his patients) when it comes to acquiring life insurance since his own total cholesterol is 232 and his HDL (good cholesterol) is just 32. His opinion aside, even in the absence of other risk factors, life insurance companies see the cholesterol ratio of 7.25 as being a standard rate class reading.

I asked my client if he had some studies or resources I could use to present his argument and he unfortunately didn’t, noting that his opinion really comes from a compilation of his own patients and their experience. One thing he did cite as significant was a number of patients who had undergone testing to look for potential CAD after their cholesterol numbers showed that they were at risk. It was this testing that led him to the conclusion that there is little or no correlation between high lipids and heart disease.

This has unfortunately not been an opinion that I have found underwriters to share. We, at the moment, are looking at a possible standard plus as his best case approval, and that will be an exception if we get it.

Bottom line. We all take our stands and run our lives based on what we believe in. In a perfect world everyone would share that opinion and if you thought your health and mortality risk was just fine, you would get the best rate from an insurance company. Unfortunately there isn’t a Perfect World Insurance Company out there.

Post from: Ed Hinerman On Life Insurance

So, Who’s Opinion Matters?

For years the underwriting benchmark for life insurance’s best rate class has been a cholesterol ratio of 5.0, 4.5 by some more conservative companies. The cholesterol ratio is determined by dividing total cholesterol by HDL, good cholesterol. For instance, total cholesterol of 200 and an HDL of 40 would give a cholesterol ratio of 5.0.

I remember placing a case with United of Omaha several years back when they agreed that a client’s total cholesterol of 300 really was trumped by his cholesterol ratio of 2.5. They guy had enough good cholesterol to fight off coronary artery disease without even breaking a sweat.

The problem is that particular case was rare, not because he had such a good ratio, but because a company stepped out of their comfort zone and offered their best rate class when all of the underwriting manuals were screaming Nooooo!! There are plenty of people, myself included, who have never had a cholesterol ratio above 3 but companies didn’t want to reward it.

Until recently that is! I’ve mentioned several times United of Omaha’s Fit test lifestyle credits that can be used to bring down the premium on rated cases. One of the criteria they use for crediting is a lower cholesterol ratio. Banner Life recently jumped on a similar band wagon by offering rate class improvement when cholesterol is higher than their best rate class guideline (220), but the ratio is below 4.

I recognize that underwriters are working with assumptions of mortality risk and doctors are working on the assumption that if you keep someone healthy they will stay alive and feel better, so it seems to me like there’s room for movement on this issue. I think both agree that higher HDL is a good thing. I hope the movement we are seeing is just the tip of the iceberg as companies move to reward those who are doing what it takes to live a healthy lifestyle.

Bottom line. At least for now you can’t do much better if you can meet the strictest guidelines, total cholesterol of 200 and a ratio of 4.5 or below. What many of us in the business (and a lot of customers) would like to see is more flexibility to reward lower ratios in the presence of higher totals. Medically it makes sense and I honestly don’t think life insurance companies have the data to prove it is safe from a mortality standpoint as well.

Post from: Ed Hinerman On Life Insurance

Finally! Some Recognition For Good Cholesterol!

Of course that questions begs another question. Has common sense ever been a standard of life insurance underwriting?

The real answer is yes. Absolutely yes. Before the big changes that came with the shrinking number of reinsurance companies and before we were traumatized as a nation financially…..back in the good old days about three years ago, common sense was abundant. When the options for reinsurance began to disappear companies were forced to dance to the tune of whoever was doing reinsurance on their business. They were no longer free to wander on and off their own underwriting guideline pages, forced to meet someone else’s expectations.

I’ve talked a lot about United of Omaha’s Fit test credits on term insurance and how they have lowered premiums substantially on rated life insurance policies. Fit test credits are all about giving credit for life style, rewarding people for things like never having smoked or exercising regularly.

Now Banner Life has jumped on the bandwagon, but has extended the credits to the best rate classes and not just for help on rated policies. Their goal is to make sure that if someone is healthy in all aspects but one, they don’t get nailed for a 30% increase in rates for just that one thing. They’ve gone big in some of the most exasperating underwriting areas, build, cholesterol, blood pressure and family history. You can truly be a picture of perfect health and any one of these things not being perfect, under their old rules, would have knocked you down one or two rate classes.

As an example, a 47 year old guy with no health issues at all, but with a family history of his father dying at age 50 of a heart attack would normally pay $2225.00 annually for $1,000,000 of 20 year term. With their new underwriting this person would qualify for a rate of $1345.00.
If his father was still living and this client had a total cholesterol of 250 but lots of HDL (good cholesterol) and had a cholesterol ratio of 3.5, instead of paying $1615.00, he would again qualify for $1345.00 if the high total cholesterol was the only issue.

Bottom line. I salute companies that have the guts to use common sense and Banner Life is to be commended (and used) for these changes. Banner continues to be a leader in term insurance rates and they have just recently come out with a very competitive no lapse guarantee universal life, and unlike some companies they are offering this great new UL as a conversion option on their term products. 2010 is going to be a good year for Banner and those who get their insurance through them.

Post from: Ed Hinerman On Life Insurance

Is Common Sense Making A Comeback?

Life insurance underwriting is kind of like sand dunes. You can take a picture at the beginning of a year and it can be absolutely clear where every grain of sand lies. The exact same picture taken at the end of the year could easily have been taken on another planet.

One of the greatest opportunities of 2009 in term life insurance came from United of Omaha with their “Fit test” life style crediting that allowed clients who could have been rated as high as table 4 to better their approved offer by 2 to 3 tables. This is an underwriting tool that has been used with universal life in the past by a lot of companies, but with no real sound logic attached to it. U of O ties it very logically to life and health style questions that reward those who are doing the kinds of things that really to impact mortality in a positive way.

One of the greatest opportunities in permanent insurance remained the universal life insurance with a no lapse guarantee. Life insurance guaranteed for life without the burden and pitfalls of cash value accumulation. While we have started to see some pullback from the really great deals of 2008, early 2009, there are still companies with products out there that would warrant a complete evaluation and overhaul of a permanent life insurance portfolio. Now that it is clear that the federal estate taxes aren’t really going away, and state death taxes never were, it’s time for high net worth families to get serious about covering that tax burden with one of the best deals in permanent insurance ever, the no lapse guarantee UL.

Another breakthrough is the addition of several companies that are taking a new look at mood disorders and deciding that, from mild depression to bipolar disorder, there is room to separate out those who are taking their treatment seriously and may actually be coping with society better than many of those who choose to just gut it out without any help.

I think one of the biggest missed opportunities of 2009 is the continued failure of companies to recognize the importance of HDL in the cardiac risk factor. They continue to hang their hat on total cholesterol if it’s higher than their guidelines allow, even in the face of high HDL (good cholesterol). There are few, if any, companies out there that will underwrite a case with a total cholesterol of 280 and an HDL of 40 (ratio of 7.0) any differently than a total cholesterol of 280 and an HDL of 80 (ratio of 3.5). Medically there is a huge difference and since life insurance underwriting in this area is all about concern over an impending cardiac event, from a life insurance standpoint customer #2 present a much lower risk than #1. They should get a lower rate, but sadly another year has gone by and nothing has changed.

Another missed opportunity has to do, not with companies, but with those agencies and organizations that offer life insurance. Another year has gone by with AARP still holding fast to its’ stance that the seniors it purports to be “the advocacy group” for, don’t deserve to be offered a fairly priced, meaningful life insurance product. They have the ears of tens, maybe hundreds of millions of seniors in this country and are wasting that opportunity by partnering with New York Life in an obscene life insurance scam.

Selectquote, the self proclaimed largest internet life insurance agency in the country, still continues to advertise on TV in borderline bait and switch manner, quoting 10 year term prices for a couple with toddlers, and now they have added their ridiculously useless text a quote feature, designed more for corralling the masses than meaningful information sharing.

Bottom line. Life insurance underwriting will always be a work in progress and it is important to note that independent agents are at the forefront of positive change. They are the driving force behind competition and with that competition comes change.

Post from: Ed Hinerman On Life Insurance

Hit And Missed Opportunities Of 2009 In Life Insurance Underwriting!

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.

Post from: Ed Hinerman On Life Insurance

Hitting A Single Is Better Than No Hit At All!

You’re applying for life insurance and they just sucked your blood and made you pee in a cup. You deserve to know what they know and there is no better way to do that than to request a copy of your labs.

I have long like the proactive approach that West Coast Life takes. As soon as they receive your lab results they send a copy out to you along with an explanation of what each lab test means. There is no requirement that you get approved or accept the policy in order to get the lab results. It is something of a freebie and a pretty valuable one at that.

I queried my local doctor’s office to see what the insurance company labs would cost if you were inclined to just go get a checkup, which most of us aren’t. These labs are a standard set of life insurance lab results and just a ballpark estimate would put the testing at somewhere around $300.

While I’m certainly not advocating applying for life insurance to get free lab work, I absolutely recommend that you pass on the results to your doctor so they can take advantage of the free labs to better monitor your health, or if it’s the first labs you’ve provided your doctor, to set a baseline. Knowing things like cholesterol levels, liver functions, and glucose level is valuable knowledge.

Those companies that don’t proactively send lab results without asking, will send you labs at no cost with a written request. In our office we include a written request with every application. If you have applied through someone that doesn’t offer that service make sure you request it.

Bottom line. That checkup you always find a reason not to get. That curiosity about your cholesterol. It’s all contained in your life insurance lab results. Always ask for a copy.

Post from: Ed Hinerman On Life Insurance

Always Ask For Your Lab Results!

I am beginning to believe that our little mountain town here in one of the healthiest states according to several studies, is home to a bunch of closet cholesterol snarfers.

I know you don’t really snarf cholesterol, but I also know that if you do the typical male thing and ignore it, don’t get checkups and generally do the health la la walk through life, cholesterol has a way of being one of the first things to start sliding. Cholesterol is also one of those health issues that isn’t just an annoyance, but can actually reach out and bite you….to death.

I had talked just a few weeks ago about a local client who bragged about not having seen a doctor really ever in his adult life for anything preventive. He thought he might have seen one 9 or 10 years ago when a cut on his finger became infected. On his life insurance exam it turned out he had cholesterol by the bucket loads and HDL by the teaspoons, not a good combination.

He was all bluster about how cholesterol didn’t mean anything and insurance companies manufactured ways to raise peoples rates. His wife called a few days later and told me to issue the policy and that her husband was going to seeing a doctor about the cholesterol.

On the heels of that comes another local client with an almost identical medical history, none, and of course expecting that he would get preferred plus rates. After all, no doctor had ever told him he had any health problems. Of course he had never been close enough to a doctor as an adult to be able to find that out. His cholesterol on his exam was well above what was needed for preferred plus rates. In fact it was high enough to bump him two rate classes, but they cut him some slack and only bumped him one class.

He had a similar reaction. Cholesterol is overrated. Insurance companies rip people off. It doesn’t appear he will do the right thing. In this case, just to prove a point, he will go without life insurance.

Men are so stupid, or at least some of them. They will poo pah cholesterol, high blood pressure, weight, family history and I’ve even listened to them try to minimize heart attacks and bypass surgery. And if they can’t get the best rates, they will use that as an excuse not to carry life insurance to protect their family.

Bottom line. It all comes down to responsibility. If you have a wife or children or owe anyone money, your death is going to have a negative impact on someone. Getting real about your health and stepping up to the plate when it comes to life insurance are important steps toward owning that responsibility. Avoiding the whole thing is just stupid and not one ounce better than that.

Post from: Ed Hinerman On Life Insurance

Ignore It And Cholesterol Will Bite You Just About Every Time!

It always amazes me the way men proclaim how many years it’s been since they’ve seen a doctor and say it like they’re proud, like it’s a badge of honor to ignore your health.

I’ve been working on a life insurance application for a local guy, my age mid 50′s, who fits into that category. Bragged when we were completing the application that he doesn’t have a doctor. I asked him when he last seen one for anything and he said “maybe 8 or 9 years ago for a cut on his finger that got infected”. I asked if he had ever been to a health fair so he could make sure his labs, things like his PSA were OK and he said he didn’t believe in lab results, so no.

He applied for preferred plus rates and was approved at standard rates due to his cholesterol being far too high and hdl far too low. When I went by this morning to discuss a possible course of action he let me know his thoughts about cholesterol (bunch of bull) and insurance companies (cheaters, swindlers, look for any way to raise rates).

This is so typical with men that it almost makes me want to buy them one way tickets to Trinidad for sex changes so they won’t be giving men a bad name anymore.

But it’s all the fault of the insurance companies! They have some kind of scam going where if they find an idiot that hasn’t been taking care of himself they sneak some sick blood into his labs to teach him a lesson. It is astounding the number of boneheads like this that get diagnosed with significant health issues because they slip up and do an insurance exam.

Bottom line. There is no honor in ignoring your health. It’s simply the wrong thing to do, if not for yourself, for your loved ones.

Post from: Ed Hinerman On Life Insurance

A Badge Of Honor!

If I had to choose one life insurance underwriting guideline that causes more consternation than any other it would be the subject of cholesterol. I still get all tied in knots over the debate concerning cholesterol that I had with ING Reliastar In December and January.

I understand the underwriting need to consider cholesterol, but common sense would tell you that there is no measurable mortality difference between a total cholesterol of 220 and 222. And the reason that cholesterol becomes such a polarizing issue is that when an underwriter bumps someone a full rate class for, say, the variance I just described, the client has to try to wrap their mind around the idea of paying 30% more for something that a 5th grader can confidently tell you is not justified.

So, obviously the best thing a person can do is get regular annual or at least bi annual checkups with lab work. If you find your cholesterol creeping up on you there are non medical ways in most cases to get it to creep back down. Eating right and getting regular exercise go a long way toward helping the body self regulate things like cholesterol and blood sugar. Doing healthy things really can make you healthy. Given this tact a person can go into an exam knowing that your cholesterol is below 200 and your HDL is above 40, there won’t be any lab surprises.

If non medical cholesterol lowering attempts don’t work, there are plenty of cholesterol lowering drugs like statins that seem to work very well. And the good news is that, unlike 5 years ago, most companies will allow their best rate class even though you are being treated for cholesterol. Not so long ago, controlled or not, just the treatment was a reason to bump you one rate class. Now companies are rewarding proactive cardiac health.

While I might go round and round with an underwriter on occasion, truth is that insurance company’s guidelines are in general a little more lenient than your doctor or perhaps the American Heart Association might want. For instance, the AHA says that less than 200 is desirable for a total cholesterol reading while most insurance companies allow up to 220 for their best rate class, some as high as 240.

Bottom line. Anyone that gets caught with their HDL pants down on an insurance exam and has to pay a high rate for it probably should review their personal health practices. Health fairs or annual checkups are just the right thing to be doing and in the whole scheme of things, health aside, the cost of the annual exams will very likely be saved in lower insurance costs and a healthier life.

Post from: Ed Hinerman On Life Insurance

Cholesterol As An Underwriting Issue!