Posts filed under 'smoking'
I just held an impromptu contest in my head to determine what group of people have the largest number of life insurance quotes asked for compared to actual policies applied for.
The results are in and I’m not going to try to make any broad social implication out of the fact that the smoking crowd won the contest. They seem to have this need to know how much life insurance will cost coupled with a real lack of enthusiasm for purchasing when they find out that the mortality experience from smoking drives their price up to 2 to 3 times what they would pay if they don’t smoke.
Never mind that even at the higher rates, most people who smoke are spending more on their habit than they are willing to consider spending on protecting their families future. I am down playing somewhat how strongly I really feel about this issue when I say that if I were King, I would require all of my subjects who smoke and have families to carry life insurance. If they refused, their cigarette money would be garnished from their paychecks to forcibly buy the life insurance. If they tried to game the system I would have their heads chopped off and their families would be awarded the benefits from their life insurance anyway.
Bottom line. For all of you who smoke and have done the responsible thing anyway, I salute you. If you smoke and are still avoiding life insurance, off with your head.
August 7th, 2008
It is a common belief that a life insurance agent’s offer of an annual review of your policy is nothing more than a ploy to try to get you to buy more insurance. I know from experience with my own clients that many are so sales phobic that their honest belief is that any contact from us, including birthday greetings, is a sales pitch attempt in the making.
In spite of the fact that my clients were never “sold” to start with and in spite of the fact that I tell them I will stay in touch during the life of their policy, at least on an annual basis, I can tell from their reaction that they think I am up to something when I call and ask if any questions have come up or if there is any way I can be of assistance (change of beneficiary, payment plan, etc).
I’m not naive enough to believe that all agents are calling simply out of a desire to be of service, and I won’t tell you that, if asked, I won’t provide up to date quotes and provide a better policy given their current situation or additional insurance if they feel that is a prudent thing to look at. But the annual review or annual service call has importance even if nothing happens.
There are plenty of agents and agencies out there who will gladly sell you life insurance and never talk to you again, so if that is what you want, it’s available. But, just for a minute, let me suggest that there is truly a value added to your product when an agent is willing to stay in touch.
I generally send out a letter to my clients about six weeks before the anniversary of their policy. Attached is a sample. annual-review-sample-letter
This contains information that may prompt questions. Suppose, unlike the sample, the letter explained that you were in the 9th year of a 10 year term. It’s time to give some thought to what happens at the end of the 10th year and possibly will lead to questions about what options are available.
This letter is followed up about 10 days later with a call from me simply asking if they received the letter (if they didn’t, it could be that their address has changed and they forgot to inform me or more importantly the company), if any questions came up after reading the letter (like what is the conversion option?) or if there is any way I can be of assistance. Usually in the 5th year or so of the policy I ask if they are still comfortable with the amount of insurance and the term length.
It is not a rare occasion, even with annual review calls, that a client will kind of forget what they have and the reminder helps remind them of why they bought what they bought. I have a substantial block of private pilot clients and it’s amazing how many will forget that the reason they purchased the policy they did and the reason they purchased it through us, is that it covered their aviation practicies at a fair rate.
I also review each client’s situation annually before calling to see if there are ways to save them money. If, for instance, they were approved initially at a higher rate than expected due to elevated cholesterol on their exam, I bring that up. If they’ve worked on getting their cholesterol down to normal limits, it’s possible in many cases to get a new policy at a lower rate. If someone has indicated that they are trying to quit smoking, I make a note of that because if they do there is substantial money to be saved. For some, an improvement in health or a change in habit may mean that they can now afford a longer term without raising their premium.
Bottom line. Service has earned a bad reputation, probably from unscrupulous agents that want to sell you something new every year whether it is warranted or not. That is called “churning” and is illegal. Don’t be afraid to participate in an annual review. If it feels like a sales call you might want to chastise your agent for that. If it feels like service and value added, that’s exactly what it is.
July 3rd, 2008
As I wrote that title it occurred to me that I might be showing my age. The advertising slogan for Prudential used to be (may still be?) “Own a piece of the rock”. Anyway, Prudential is a stand alone company when it comes to their treatment.
In an article in Cigar Aficionado a few years back they provided an overview of where cigar smokers could get the best deals. Unfortunately their source of information wasn’t horribly accurate and they wouldn’t entertain any clarification. I did post some updated information on their forum today and hopefully that will lead them to use an article to update their readers.
As recently as two years ago there were a few more companies that would entertain people who regularly smoke cigars, smoke pipes or chew tobacco, and tested positive for nicotine. The positive test is a big deal. There are actually numerous companies that allow “occasional use”, defined as anything from a cigar a week to 4 cigars a year, but if you test positive for nicotine all bets are off and you get a smoking rate.
Today Prudential stands alone as the company that will approve at non smoker rates for nicotine use other than cigarettes, even with a positive test. Any cigar smoker who is paying smoker rates through another company is paying about twice what they need to.
Bottom line. Many agents out there don’t do their homework and are just fine with you paying more than you need to. After all, more premium means more commission. Contact an independent agent today and tell them you want non smoker rates for cigar, pipe or chew use and if they don’t quote Prudential, find another agent.
July 2nd, 2008
Ahh! The good old days when smokers were smokers except with one life insurance company, some smokers weren’t smokers.
This actually wasn’t all that long ago, maybe a year and a half, but there was a company called US Financial who truly looked at things in a different way. This was a company that pioneered what they called “clinical underwriting”, a term that simply meant that they looked at each case on its’ own merit. This differs from traditional underwriting where, literally, each applicant with a health issue or habit is thrown into the same bucket and they are all given the same rate class with very little consideration for differences in control or habits.
This proved to be huge for those people who fell into what US Financial considered a social smoker category. Qualification for social smoker status was pretty straight forward. If you were under age 50, smoked less than a pack a day and had smoked less than 20 pack years (defined as less than a pack a day for 20 years), you could qualify for preferred non smoking rates even though you were in fact smoking.
This differed greatly from traditional underwriting. All the other insurance companies would put you in a smoker category even if you were one of those people who smoked half a dozen cigarettes a month, truly a social smoker. Those companies, which are now all companies since US Financial was purchased and put out of business by AXA Equitable, would have you pay rates 2 to 4 times higher than a non smoker even though there is clearly no clinical or medical link between a very occasional cigarette and the health conditions that are attributable to regular smoking.
But, as happens with most good old days, they disappear. AXA Equitable bought and destroyed one of the best, most innovative companies in the history of life insurance.
Bottom line. Now cigarette smokers are in fact smokers. There is still one bastion of relief for those who use tobacco or nicotine products other than cigarettes. A good independent agent would guide you to Prudential for non smoker rates if you are a cigar smoker or pipe smoker, or happen to chew. Again, all other companies would put you in the same bucket as cigarette smokers for those habits.
June 9th, 2008
I know I’ve been all about the downside of smoking and life insurance this week. I’ve gone on and on about the valid reasons why life insurance underwriters are a bit brutal when it comes to smoking, especially in combination with health issues that are caused by smoking or are exacerbated by smoking.
So, in an effort to end the week on an upbeat note, I thought I would shift gears from cigarettes to cigars. While most of us can probably agree that there are fewer known health risks connected to cigar smoking, primarily because you’ll kill yourself if you inhale, most insurance companies treat cigar and cigarette smokers exactly the same. If you smoke, you’re a smoker.
There are a handful of companies that allow “occasional” cigar use at rates as good as their best non smoking rates, but they are all over the map on what they call occasional. For instance, West Coast Life says 6 per year or less, Banner Life is at 1 per month, and Genworth is 1 per month. Keep in mind that life insurance exams test for nicotine, and there is a requirement with all “occasional use” companies that you test negative for nicotine. I always encourage the “occasional” applicants to lay off the occasions for 2-3 weeks before the exam. One of my clients recently disregarded that suggestion and had a cigar 2 days prior to the exam and blew his chance for some great rates.
There are a few more companies that actually allow you to celebrate all year. American General and ING Reliastar will allow a cigar a week, but again you have to test negative for nicotine. Just in case anyone thinks I am gaming the system by suggesting to clients to lay off for 2-3 weeks, these companies know that if someone smokes 1 per week consistently they will test positive. They also know that the agents recommend a hiatus and as long as the labs show what they want to see, they will approve it.
Many more companies offer their second best non smoking rate for occasional use. Included in that group would be Savings Bank Life who will allow a “few cigars a year”, North American at 2 or less per month and Lincoln Benefit at 1 per month. Again, negative nicotine.
The standout company in the crowd is Prudential who will allow cigars, pipes or chew at standard plus non smoking rates. No limits are required and they expect a positive nicotine result. They are the go to company for pipes and chew and for anyone that will have a problem showing a negative nicotine level.
Bottom line. At least there are options when it comes to cigars, pipes and chew. When it comes to cigarettes, the rate choices are high or higher.
May 23rd, 2008
I went off a bit on some of the more ridiculous combinations with smoking the other day. Smoking and asthma. Smoking and heart disease, etc. Some guy (blog name Joe Camel (clever)), took some hard swings at the life insurance industry for being so mean to smokers. Fortunately for me smokers run out of breath quick and the hard swings turn to frail flailing.
So let me throw a little different spin on this subject and see if makes the point. 120,000 people a year die from COPD (chronic obstructive pulmonary disease), almost all of them smokers. COPD is the number four killer in the US behind heart disease, cancer and strokes.
The American Lung Association shared some interesting facts about the little talked about COPD.
It seems that COPD is another one of those silent killers, not unlike high blood pressure or hypertension. Often the symptoms are shrugged off as natural consequences of smoking or lifestyle. Things like smoker’s cough, or just feeling your age or feeling out of shape. The longer they are shrugged off, the more damage your lungs suffer.
Bottom line. Whether you agree with life insurance companies and their underwriting guidelines around smoking, do the right thing. My wife and I recently vacationed in Mexico and in the duty free shop at the airport they were selling huge boxes of cigarettes. I think each box must have held 10 cartons or something. On the top was the brand name of the cigarette and on the side, in huge letters that covered the whole side of the box, it said SMOKING KILLS! Sounds like someone down there understands the statistics.
May 22nd, 2008
To me this is another great example of our education system really missing the mark as far as what they perceive to be the most valuable information a young adult needs to get on with life. It is, and isn’t amusing that a high school student is required to pass Algebra in order to graduate, but they don’t have to be able to balance a checkbook and they don’t understand credit.
It is also less than amusing that human physiology is really just a study of the parts, and not an education in what can go wrong with the parts and why. High school students are never really exposed to the true risk factors of heart disease. They don’t understand that smoking, obesity and a sedentary lifestyle is a very real set up for a heart attack.
Blissful ignorance is hardly the gift of education. And it is this blissful ignorance that propels many children into adulthood destined to have serious health issues. It is this lack of education that will leave many of them unable to procure affordable life insurance when they reach that time in their life where they have family or business interests that need protection.
Bottom line. Our education systems are stuck where they are, so we, as parents, need to pick up the ball. Our children should not leave our homes unprepared. As they grow older we should never shy away from providing information they need to make prudent choices about their health, about credit and mortgages, and yes, about life insurance.
May 20th, 2008
A perfectly healthy person who smokes can expect to pay, best case, twice as much as a person who doesn’t smoke for life insurance. I’ve been on that soap box often enough that I don’t know that I need to beat it to death anymore.
With that being said, there are other times when smoking can have an even more profound impact on underwriting. An underwriter I know and work with on a regular basis calls the extra premium or sometimes the decline that results from smoking in addition to certain health issues as a “you just can’t fix stupid tax”.
We’ll start with the flagrant examples and work our way back toward some of the more subtle. By the way, all of these examples are from people who have actually called me attempting to get life insurance. A person who has diagnosed COPD (chronic obstructive pulmonary disease) and still smokes has apparently missed something somewhere and is a slam dunk decline.
A person with an otherwise insurable history of cancer, if they smoke, would either suffer a much higher rating or be declined because they haven’t quite grasped the fact that there is a direct correlation between abusing your body and bad things happening.
One that comes up fairly frequently is the person who has suffered a heart attack or been diagnosed with CAD (coronary artery disease) and still smokes. Hellooo!!!! The doctor said you need to quit. Your wife said you need to quit. The surgeon general said you need to quit. Your mother is going to outlive you because you refuse to get a grip and do the right thing.
Asthma and smoking. Depending on the severity of the asthma, this can be reasonably insurable to highly rated. It’s frankly never made a lot of sense to me. If you have trouble just breathing air, why would you substitute smoke for air? Kind of like if you had trouble swallowing water, substituting mud.
Bottom line. Life insurance underwriting allows for insuring smokers in most cases. Higher rates will always apply when comparing smokers to non smokers. I’ve never been shy about ripping the heads off underwriters when I think they’ve got it wrong. When it comes to smoking combined with smoking caused or exacerbated health issues, I believe they’re right on target.
May 15th, 2008
I have no idea, but if someone has had a heart attack I know that one thing that won’t hurt their feelings is finding affordable life insurance rates. While I may not have a clue about broken hearts, I can shed some light on what life insurance underwriters look for when underwriting heart disease and heart attack cases.
The difference in underwriting is very subtle between heart disease (CAD)
and heart attacks. The real difference has to do with the problem being diagnosed before or after damage (ischemia) has occurred in the heart. If the damage is minimal the underwriting outcome will be virtually the same. As the damage level increases, rates become higher due to the weakened condition of the heart and subsequent possible shortened mortality.
Having said that, life insurance underwriters look at several key factors in weighing the risk.
1. Age of onset. This one isn’t too hard to imagine the impact. Just consider for a moment the difference in your reaction upon hearing that a 35 year old cousin had heart bypass surgery versus hearing that his father, a 60 year old, had the same occurrence. There isn’t anything normal about a young person having cardiac issues, so age of onset is important to underwriting. Generally, prior to 50 is going to increase the rates and prior to 40 will increase the rates dramatically.
2. How many vessels were involved? Whether there was a heart attack or not, we are generally talking about either bypass surgery or placement of a stent through angioplasty. The number of vessels is some indication of not only severity, but chance of recurrence. A one vessel issue will receive more aggressive underwriting than, say, four or five vessels.
3. Recurrence. It is not uncommon with chronic CAD for a person to have to go through more than one procedure. If these are less than three months apart it is generally looked at as one event and wouldn’t be considered chronic. Often these occurrences are years apart and that presents an obvious increased risk to the insurance company. As long as the heart, as shown through the results of a stress test, is still strong, insurance should be attainable although at higher rates.
4. Heart damage. Before accepting a risk on a cardiac case, insurance companies will want to see a stress test done post heart attack/bypass/angioplasty. Even 10 or more years out from the event, if a person hasn’t had a stress test within the previous two years, insurance companies will likely require one before considering approval. The primary assessment of heart damage from the stress test is the left ventricular ejection fraction (LVEF). This, simply put, is a measure of how efficiently your heart is pumping blood. A normal LVEF would generally be around 65%-70%. Insurance companies will generally not consider coverage if the measurement is below 50%.
5. Lifestyle. Underwriters pay close attention to whether or not the event got your attention. If you’ve had a cardiac event and, say, continue to smoke, if you are approved it will be at an extraordinarily high rate. Most companies will simply decline to accept the risk. They also look at fitness issues such as exercise and obesity.
Bottom line. Fair rates on life insurance are available for the majority of people who have been through a cardiac event. Thanks to modern medicine far less damage occurs on average than used to occur. What this means for insurance companies is that, rather than knocking someone out of the running for life insurance, it keeps them in the running and with the survival of the wake up call and lifestyle changes, mortality experience is good. You’re going to be around for a while.
April 16th, 2008
People act shocked and amazed when they find out they don’t get those life insurance rates advertised everywhere. I think somewhere inside they knew it would happen because those are non smoking rates and they smoke. And all that flashed fine print on the insurance ads can hardly be seen through the smoke. Surely though, they’ve seen the warning on the pack that says smoking has NOT been linked to great life insurance rates.
Even the companies that are actively seeking smoking clients will charge twice as much for a preferred smoking rate as they will for a preferred non smoker. Some are three times more and there are a few trying to send a message with rates four times higher. I’m thinking the underwriters at those last two sets of companies may have read somewhere that there are statistical links between smoking and cancer, smoking and heart disease, smoking and etc, etc, stroke, etc, etc………..
Some life insurance companies will allow a person, who has smoked for 20 or 30 years, quit for 12 months and get preferred non-smoking rates. I know they say that damage from smoking starts to reverse itself shortly after you stop smoking, but all the way to preferred in one year. I’m all for people getting great rates, but…. it seems to me that the companies are probably charging non smokers too much to start with if they will allow that kind of underwriting.
Bottom line. I suspect there are smokers and ex-smokers who might not jump on to my bandwagon. My suggestion. Quit smoking and go grab those preferred non-smoker rates before those companies come to their senses.
April 7th, 2008
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