Complete Disclosure? No, Really Complete!

A life insurance decline doesn’t do anyone much good. The client doesn’t get the insurance and the agent and company spend time and money getting to that conclusion and lose money because nothing is ever purchased.

Just so no one thinks I’m starting out Monday morning with a little whine, let’s separate those declines into two categories. The first decline comes when lab results come back from the exam with unacceptable readings that neither the insured or the agent knew ahead of time would be there. For instance, if a person’s PSA was out of the normal limits, an application would be declined or at least postponed until prostate cancer is ruled out. If an applicant’s cholesterol was 380 on the exam they would likely be declined until they were examined and treated and the value was substantially lower. A decline for something that was unknown by the applicant may speak to their lack of personal health care, but not to their integrity.

The other reason for a decline is generally due to information that was not divulged on the application or to the agent or to the examiner or to the company. This is information that is intentionally not shared in the hopes that it will not pop up from some source and they might get approved in spite of the fact that, in light of the information, they should be declined.

I’ve talked in the past about the initial interview I do with clients in which the health and life style questions all start with “Have you ever been diagnosed with or treated for?? – Have you ever participated in?? – Have you ever been rated or declined for insurance??” Have you ever? Not talking about this week or last week, last year, within the last 5 years or 10 years….the question is “Have you ever?”

When we get a couple of weeks or a month into an application and get information from medical records or from the Medical Information Bureau (MIB) that results in a decline, or we find out that the applicant was declined recently for a condition that they were completely aware of, and it was just never shared with anyone, it’s either an attempt to defraud or the person somehow didn’t understand the verbal questions from the agent and examiner and the written questions on the application.

In contrast to these blatant wastes of time and money are those clients who fully disclose their history up front and open up the opportunity to shop it and discuss it with underwriters and determine what direction to go in to avoid the decline.

Bottom line. There was a time when auto insurance agents really didn’t run a MVR prior to binding the insurance policy and setting the rate. So, if they asked how many speeding tickets you had in the last three years and the honest answer was 5 and you told them 0, you got the rate for a safe driver. Insurance companies started getting more thorough than that 20 years ago and it seems like the public hasn’t figured out yet that half truths or lies will be uncovered.