Posts filed under 'smoking'
Life insurance has this whole little underwriting niche that comes under the heading of lifestyle. It’s not about health or family history and it’s not about your lab results, it’s about, well, your personal life.
Probably the most common lifestyle issue that catches people by surprise when they apply for life insurance is their driving record. Underwriters regularly pull motor vehicle reports and with most companies if you’ve had 3 or more moving violations (speeding, etc) in the last 3 years, you will get whacked a bit. If you make something of a career out of talking to highway patrol officers you may even be declined for coverage.
Another lifestyle issue is smoking pot. Companies are all over the map on their treatment of pot smoking. Let’s set aside for a moment that in most places it is against the law. The underwriters feel the need to whack you to some degree, but it’s hard to figure out the logic. Given preferred plus health, finding preferred plus rates with admitted marijuana use is nearly impossible. Some companies will allow approvals at standard non smoking rates, showing their disapproval by bumping you a few rate classes. Other companies exact their social revenge by levying smoking rates so that you pay premiums comparable to those of a cigarette smoker.
Then there is the subject of legality and some companies flop down on the legally moral high ground (get it, high ground???) and decline to issue a policy at all.
Bottom line. It’s best to approach the issue of purchasing life insurance if you smoke pot with a clear head, and an independent agent who will have access to the companies that take the least offense to your relaxation method.
July 6th, 2009
I would be the last person in the world to say that habits are easy to change, especially bad, life long, ingrained habits. But no kidding, there are some cases I really can’t wrap my mind around.
The one that caught my “you’ve got to be kidding” attention today was a 68 year old man who has smoked most of his life, but has cut way back. Used to be two packs a day, now down to less than a half pack. He called to see if he could get better rates now than the policy he took out 10 years ago.
10 years ago, other than being a smoker he didn’t have any health issues. Since then he has battled glaucoma, losing one eye. He is now treated for high blood pressure and high cholesterol. 4 years ago he was diagnosed with emphysema and is on oxygen at night.
And he continues to smoke! And I wonder in these situations if the person has any idea what’s in store because of the choice to continue to smoke. It just truly baffles me.
And from a life insurance standpoint he’s up a creek. His current term insurance policy is at the end of the guarantee period and he can’t afford to do a conversion. To put it very bluntly, he can’t get a new insurance policy. He would be declined for traditional insurance because of the combination of his health problems and still smoking. If he can’t afford a conversion to a universal life policy he sure can’t afford something like AARP guaranteed issue whole life.
Bottom line. Really, the bottom line is two fold. Take care of your long term life insurance needs when you’re still healthy. I know there are things that can just jump up and bite you that don’t allow planning time, but if you’ve been smoking two packs a day for decades, you gotta know something is coming. And the second thing is, wake up! These are some amazing things we have, these bodies, but they won’t take abuse forever and just keep on ticking.
July 1st, 2009
I’ve never been seen smoking and I suspect that Dave Ramsey isn’t real big on the habit either, but after spending the last year and a half immersed in Dave Ramsey through his Financial Peace University, I am convinced that Dave Ramsey wouldn’t want to monetarily punish smokers for their choice.
I think it’s safe to say the Dave is the best known and most listened to debt reduction advocate out there today, far surpassing those who seem to kind of flit around the periphery like Suze Orman. Dave’s messages stay consistent. They are no nonsense and meaningful to me, they are sound from a biblical point of reference.
Dave has recommended a nationwide agency, Zander Insurance, for some time. Quoting him on Zander’s home page, “Four generations and 80 years experience, unparalleled commitment to service, the best products on the market, and a principled commitment to debt free strategies, are just a few reasons I trust, use and strongly recommend Zander Insurance.”
Having learned and taught Dave’s debt free strategies I find it more than a little troubling that, using myself as an example, if I were a smoker and took Dave’s advice to use Zander life insurance, I would pay nearly $1200 more per year for a $500,000, 20 year term insurance policy than I would through most other nation wide agencies out there. Zander’s website quotes my best rate in this scenario as $6295 a year from Transamerica, while our website and many others I checked quote $5100 annually with Liberty Life. I believe that Dave might characterize that kind of unnecessary expense “a stupid tax”.
I emailed Dave on his radio show and also sent this email to his info@ address. ” I’m a life insurance agent and agree with your philosophy on term versus permanent insurance, actually have since well before I ever heard of you. Been through FPU and am facilitating FPU at my church right now. What a life changer. Not debt free yet, but well on our way.
My question is why Zander when they clearly don’t offer the best value in term insurance in many cases? If you bought from them and then found out you could get the same amount and term length for $1000+ a year less with a company they didn’t quote, would you be OK with that?” I really don’t expect a reply on his radio show, not because he wouldn’t want to talk about it but rather because there are who knows how many thousands of calls and emails to him daily. What are the chances?
I did receive a response from his customer care folks and was told “About your insurance questions, Dave has been working with Zander for many years now. They have been in business for several years as well. Four generations and 80 years of experience…they offer the best products on the market and have a commitment to debt free strategies (which is what Dave teaches). Dave strongly recommends them and personally gets his insurance through Jeff Zander. This is the only insurance company that we endorse and recommend not just because of their excellent commitment to service, but because they provide the most informative access that our customers and listeners need—when it comes to insurance. They are not only committed in providing excellent service to us (our team members) and families, but to our customers and listeners as well. This is who we recommend and endorse.”
I emailed back and thanked them for the response but suggested that my question really wasn’t answered. The question really went to whether Dave was aware of the fact that Zander had made an administrative decision to charge far more than necessary in some cases. The answer I received was to contact Zander if I had questions concerning their term insurance plans. Quoting Zander insurance from their website, “GREAT RATES AND GREAT SERVICE. A strong statement we know, but with Zander’s 80 years experience and our arsenal of term life insurance plans, we know we can deliver. We understand the importance that term life insurance provides to a family’s financial future. We also recognize that it is just one piece in your financial plan and needs to be the most cost effective option allowing you to focus on debt reduction and wealth accumulation strategies. It is the balance and commitment to these two principles that define our mission to help you succeed in your goal of financial peace and independence.”
Bottom line. I write all of this because there are so many agents and agencies that really do embrace Dave’s beliefs and really do more than lip service to “providing the most cost effective options”. I’m not suggesting that Dave endorse me or any one other than Zander, but I am suggesting that when a person has millions of followers they should stand ready to take those they endorse to task when they fly in the face of deeply held beliefs and philosophies.
June 1st, 2009
If anyone out there is suffering from the illusion that your medical records are accurate, let me clue you in. The chance that your records contain substantive errors is about 75%. The chance that your records are error free is within the margin of error for 0%.
Doctors and their staff maintain, and I use that word loosely, your records as if they are only for their use and will never be seen by anyone outside of their office. Given that point of view, things like updating family or social history, or asking you to review your records occasionally to help avoid errors, just aren’t in the cards. They just want to stuff it in there and get it back on the shelf.
Case in point is a client who quit smoking about a year and a half ago. He applied for life insurance and even though his labs showed negative for nicotine use, his records indicated that he was attempting to quit and having a very challenging time of it. This entry was 9 months after he had quit. The same entry under his social history was there from the year before. They never bothered to update the social history and he didn’t think, since they didn’t ask, to bring it to their attention. The life insurance underwriter deferred to the records and offered my client a smoking rate.
Once we found this error, a very common error of dragging information forward from one visit to the next without updating, he came across more errors. According to the family history both of his parents were deceased. This was news to him since he had just spent a weekend with them. The errors have now been corrected and we were able to get the smoking rate changed to non smoking and his parents are no longer dead.
Just like your credit record, your medical records need to be reviewed occasionally. It may not be the most exciting weekend activity you’ve ever come up with, but the longer errors are left alone, the less likely you will find them and the less likely that you can get them corrected. Doctors aren’t real big on correcting old errors when it is a you said/he said a long time ago situation. The best practice is to ask your doctor or nurse to scan or fax you a copy of the completed notes after any office visit. A fresh error is easily corrected.
Bottom line. Getting an error corrected mid underwriting is tough. Doctors don’t jump on these tasks as top priority. They also don’t like changing records because that is admitting that they did something wrong and they see malpractice written all over that admission. And underwriters, rightly so, are often a little skeptical about changes in records that occur during underwriting. They, depending on the error, might see it as a manipulation of the system to improve your perceived mortality risk.
May 13th, 2009
I finally got my wife to look the other way while I jumped out of an airplane for my 54th birthday. She’s always so nice about asking me what I want for my birthday, and for the past 5 years I had
been telling her I wanted to try skydiving and that would be a href="http://www.mile-hi-skydiving.com/tandemEx.php">great present. She steadfastly refused, not wanting to be a party to my smashing demise on an airport runway. So, having paid for it myself and knowing that my life insurance was all current, it’s a perfect example to discuss how life insurance companies feel about you taking up risky hobbies after you already have insurance in force.
The whole thing hinges on a simple question. Were you actively planning on doing the activity when you took out the insurance? Hoping to do something at some point in the future is not actively planning. Hoping for it, dreaming about it and asking for it for your birthday don’t constitute actively planning. Having a date set to jump out of the airplane is actively planning. If you weren’t actively planning when you took out your life insurance policy, you’re covered.
A current client is a good example of this. He travels all over the world in his business and we divulged all of the places he travels or has plans to travel to on a questionnaire that went with the application. The policy was approved, but before he put it in force he called and asked, “Will this policy cover me if I start traveling to places that weren’t on the foreign travel questionnaire?” Since he doesn’t have any current plans to do so, the answer was yes.
This question has been brought up by a number of my private pilot clients. In many cases they were ready to dump life insurance policies that they had taken out prior to becoming a pilot. So my question to them was, “at the time you took the policy out, were you actively planning to start training as a pilot? Had you signed up as a student pilot?” If the answer was no, their old policy covered them. They also ask about future changes in their aviation activities. If, down the road, they get an opportunity build and fly an experimental airplane, as long as it wasn’t planned at the time the insurance went in force, they’re good to go and fully covered.
From an insurance company point of view, when they underwrite your policy there is an assumption that people with bad habits will stop them and people without bad habits will find some. I have had clients that started smoking after they had insurance in force as a non smoker. They were fully covered even if they died from a smoking related cancer death. It is not uncommon for a recreational scuba diver to take up wreck or cave diving after a while. As long as they didn’t plan on doing wreck or cave diving when they took out a policy, it’s covered.
As for me and my 54th birthday flight of fancy, I was covered. And it was awesome.
Bottom line. Insurance companies don’t assume your life will remain static after they approve your policy. Before you run out and look for new insurance because of a lifestyle change, have your policy reviewed by an independent agent. You may be covered already.
March 31st, 2009
Well, if the last post didn’t hit on anything else important, everyone should at least know that smoking cigarettes can change your life expectancy, and not in a happy way.
If you do smoke cigarettes and need life insurance, let me be very clear about this. You need to shop with gusto. Usually there are just a couple of companies that will have rates that are as good as it gets for a smoker. From there the rates get ugly and by the time you are down to the 10th best company it’s like those rates got hit by a whole forest full of ugly sticks. There are fair rates out there given the mortality risk that smoking produces and understand that they will be about double what a non smoker will pay, at best, and also consider it a wake up call and a good reason to consider quitting. Once you haven’t used any tobacco or nicotine products for 12 months you can cut those rates in half or buy twice as much insurance or double the term length.
But what about cigar smokers? Or chew or snuff? Depending on the extent of your use, how heavily you smoke or chew, the rate classes you can qualify for can range anywhere from standard plus non smoker to the best rate class, preferred plus non smoker. The determinant of how heavily you use these things is first, your own statement as to use, and second a lab test that can determine if you are in fact an occasional user or an everyday user.
There are plenty of companies out there that will give great non smoking rates for cigar smokers if you truly don’t smoke daily. The most liberal actually says that you can smoke as many as one a week, but you have to test negative for nicotine. A little tricky. Most companies lean more toward the “occasional” use as acceptable, more like 1 a month or 4 a year. If that is your habit and you don’t smoke one shortly before your exam, a negative nicotine reading should be no problem.
Then there are a few companies that will offer non smoking rates, even with positive nicotine levels, as long as your nicotine use does not include cigarettes. Pipes, cigars, and chew are all acceptable at non smoking rates.
Bottom line. Big difference between cigars and cigarettes from both mortality and life insurance price views. Again, if you smoke cigarettes get an independent agent and shop carefully. If your nicotine habit is other than cigarettes, get an independent agent and shop carefully.
March 26th, 2009
I knew a guy who made cabinets for a living. He bid jobs through local contractors and directly to homeowners and I could never figure out how he arrived at the prices he presented. There didn’t seem to be a lot of equity between one quote and the next.
Now I know there are differences in materials and I suppose mileage to and from the job site might play into it, but well, it just didn’t add up, so I asked. He explained to me that the calculation was very simple. He could figure the materials right down to the nearest dollar with very little waste. He then added that figure to how much he felt he needed to live on during the period that it would take him to complete the job. If the job was calculated when he had a vacation coming up it tended to be higher than at other times. Very scientific!
Not sure what made me think about that. In life insurance the cost of the job is determined by the health of the applicant and a mortality table, a table that gives the average life expectancy of a person at any given age. Of course in the final price are things like reserve requirements, factors for whether it is paid annually or monthly and, who knows, maybe how much the president of the company feels he will need from each policy sold to live through the next month.
The health of the applicant is a big swing factor since obviously there are those health issues that have an impact on mortality. While we all know people who have lived to better than average mortality experiences while smoking, statistics would show that life expectancy for smokers is shorter than non smokers.
By manipulating the different factors such as family history, driving and drinking habits and whether you have or are treated for high blood pressure, you can see for instance how a 35 year old male who smokes, drinks more than 3 drinks once a week, has 3 or more traffic violations in the past 3 years, has a family history of heart disease and is treated for hypertension, has a life expectancy of 62.3 years.
Compare that with a 35 year old male non smoker, who doesn’t drink and drives very prudently, has a good family history and no problems with blood pressure with a life expectancy of 79.5 years. Even if all of the other factors are in his favor, just smoking reduces mortality by 7 years.
And that is just the surface of a very complex practice known as underwriting. When you consider that obesity is the leading risk factor for diabetes which is a leading risk factor for heart disease, and that each of those health issues has possible collateral health issues, well, sometimes I find it amazing that we can get good, affordable rates for someone who is overweight.
Bottom line. When you apply for life insurance the underwriter has to go figure. While they use mortality tables, they also follow guidelines that have a lot to do with company philosophy. Unless you are perfectly healthy and don’t have any risk factors, the underwriter will have to mix it all together and determine what part of the risk pool you should be paying for.
March 23rd, 2009
One of the key life insurance underwriting factors for just about any health or mental health issue is compliance with treatment and avoidance of other risk factors and collateral health issues.
Compliance is taking medication prescribed exactly as it’s prescribed. If you’re prescribed medication for blood pressure to be taken twice a day, take it twice a day, not just when you feel like you have high blood pressure. Compliance is about seeing your doctor as often as they need you to and taking tests that they suggest and order in a timely manner.
Compliance is about making lifestyle changes. If obesity is an issue that is driving your health problem into the danger zone, do something about it. If you’ve tried and can’t seem to make any headway, talk to your doctor about gastric bypass surgery. While there are dangers that go with the procedure, there are also dangers that go with remaining morbidly obese. If your doctor tells you to quit smoking because you have heart disease or COPD, get real about your future and quit smoking.
A study recently released showed that heart patients were literally overcoming the medication provided to lower blood pressure and cholesterol by continuing to smoke and not changing eating habits. They seem to believe that the medication will overcome their lifestyle when all evidence shows that just exactly the opposite is true.
I had an inquiry just today that stated, “I have tried to get life insurance but have run into problems I have had a mini stroke 5 years ago and I have diabetes non insulin I smoke and have mild emphysema and I have high blood pressure but it is under control with medicine. I am trying to get insurance for my family can you help?” Well, no would be the answer. Here is a person with 4 health issues, all of which are exacerbated by smoking, and they continue to smoke. I wish I could help everyone that inquires, but this person has put themselves solidly in the decline column and won’t move from there until they start taking health seriously.
The good news is that for those that do take that heart attack seriously and make the necessary life style changes and work with the medicine instead of against it, mortality prospects are good and life insurance is attainable.
Bottom line. In your quest for good life insurance rates there is simply no replacement for following doctors orders and using common sense.
March 13th, 2009
For those that don’t smoke there is a virtual log jam of companies scrapping it out for those who qualify for the best rate classes. Not so if smoking is part of your portfolio.
For those who smoke it is imperative that you use an agent that has access to all of the companies that offer competitive preferred smoker rates. An independent agent will always keep a bevy of competitive companies in their portfolio. So is it really a big deal if you don’t get the absolute best rate?
Using myself as an example rapidly crashing in on age 56 and generally in preferred health, let’s assume I want a $500,000, 15 year term insurance policy. Transamerica and Western Reserve would lead you to believe that it’s a competitive world for smokers my age. They both would offer a price of $3555 annually. They want the business and apparently want it a lot since the next best premium would be from Ohio National at $4425. When you are down to the 10th best preferred smoking rate, Security Mutual at $4865 annually you’re nearly 30% higher than the best rate. I guess the answer is yes, it is a big deal. It pays to shop.
Just to point out the difference between smoking and non smoking, a non smoker would be just $1160 annually and there are 30 more companies within $200 of that. Think there’s a difference in mortality risk?
With smokers it seems that it is all about companies wanting to round out their portfolios. They have enough preferred plus business and they have enough impaired risk business (not so healthy), so they will lower their rates on smokers long enough to get a balanced quota there. You never see a company that is consistently on top. They go there and get what they want and then they get out before their risk pool becomes unbalanced.
Bottom line. All of that is to say that if you don’t have an agent who is willing to shop for you and, more importantly, they are willing to place your business with those companies that want it at the time, you could easily end up paying 30% more than you need to. That second part, placing it where it needs to be, isn’t as cut and dried as you might think. A lot of agents only handle a few companies and aren’t willing to get appointed with the new top dog to win the day for you. Many of the competitive cases I’ve won have been when I find the new top dog, get appointed and quote them, blowing away the competition…..for you.
February 17th, 2009
I’m often asked, after the fact, what it takes to get the best life insurance rates. While I would be hard pressed to cover everything that could be hiding in your medical records, I can provide a general rundown based on the exam, labs, family and personal history.
Generally a person can’t have used any kind of tobacco or nicotine products in the last 5 years. They test for it and while the test really won’t show anything more than a month or two old, medical records almost always indicate if a person is smoking or uses other types of tobacco. If you say no and die during the incontestability period due to lung cancer, you better figure they will be asking people who were around you prior to your death.
Family history generally holds the best rate at “No cardiovascular disease or cancer prior to age 60″ for your mother, father and full siblings. A few companies say no death prior to age 70 and a few add diabetes to the before age 60 list.
A few companies allow blood pressure treatment for their best rate. Most don’t allow it. Either way, good control is a must with 135/80 being a pretty standard benchmark. Some allow 140/80. That’s actually pretty liberal. Most healthy folks are more in the 120/75 and under range.
Cholesterol treatment is being accepted for the best rate class by more companies all the time. That being said, good control is being looked at more stringently than ever before. The old benchmark for most companies was a total cholesterol of 220 and HDL of at least 40 giving a ratio of 5 or less. Some companies are going as low as 205 and a ratio of 4.5 for their best rate now.
The only cancer history acceptable at the best rate class is one instance of basal cell carcinoma. Multiple basal cells can be OK with some companies, but any other cancer history will end your chances for the best rate class.
Your driving record counts. Most companies won’t allow more than one moving violation in the last 3 years and yes, they will pull an MVR and check. Best case for the best rate would also include no reckless driving, DUI’s, license suspension or revocation in the last 5 years. Many companies are more stringent on the DUI topic.
Private pilots can only get the best rate from a few companies and they generally have to be well qualified. Instrument rating and enough total hours and annual hours to be considered experienced is a must.
Hazardous activities is kind of a crap shoot. Scuba diving can be ok if you aren’t going below 100′. Skydiving never gets the best class. Rock or mountain climbing, car or motorcycle racing and extreme sports will almost always bump you out of running for the best rates.
The last of the general underwriting guidelines is build. All companies have height/weight charts that they use and for the most part they run pretty much the same. Using my height of 5′10″, a sample of weights for best class are American General at 195, Banner at 196, Genworth at 193 and probably the most generous is Prudential at 202.
Bottom line. They don’t just ask how you’re feeling and give you a policy at the best rate. There are a lot of people who say these rates simply aren’t attainable, especially at older ages, but plenty of my clients receive offers in the best rate class and the oldest of those was 79 at the time.
February 17th, 2009
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