Do Life Insurance Underwriters Have Emotions?

I know I go through some weeks sure that all life insurance underwriters are kind of mechanical. They look at the records and the labs and look in their underwriting guide and stamp the appropriate approval on it and then on to the next. No emotions. Just the facts ma’am!

But then a day rolls around when an underwriter turns out to be human, but that door swings both ways. I have seen underwriters who are truly empathetic toward a case. They know it should receive a standard rate but, darn it, something tugs at them and they approve it preferred. Now, understand that this doesn’t happen very often and generally speaking never happens above a company’s retention limit.

Then there’s the flip side and I often chuckle when it happens. There are some underwriters who, if they feel a client has purposely been deceptive, OK, call it lied to them, the hammer comes down and the resulting approved rate bears no relevance to the medical facts of the case.

That happened today with a client who had presented himself as a preferred plus client. His only issue was treatment for high blood pressure, but on the exam and in his records his average was 114/70 on medication. I chose the company I did because they are one of several now who will allow best rate class with controlled hypertension. If he had answered all of the questions as candidly as he did the health history questions we would have been good to go, but one question we always ask is “have you ever smoked or used tobacco or nicotine products of any kind?”

His answer was very clear. Never!! Well, today he was approved as a standard smoker because the lab test for cotinine, a metabolite of nicotine was positive. By all logical underwriting he should have received a preferred smoker offer since he is in preferred plus health, but he lied on the application, lied to me and to the examiner and to the underwriter. This client’s quoted rate for his term life insurance policy was about $75 a month. The approved rate after he ticked off the underwriter was over $350 a month.

I’ve had several clients claim that there must be some mistake, a mix up at the labs or just a false positive. The truth is that the test is highly accurate, to the point that insurance companies generally will not allow a retest. They dig their feet in on this for two reasons. Number one is the accuracy of the test and number two is a retest can take days to get arranged, allowing the client time to purge themselves of the positive cotinine.

I had a client once who came up positive and swore that he could get letters from his wife, pastor and boss saying that he didn’t use any kind of nicotine. He wanted a retest. I knew the company wouldn’t retest him so I offered that if he would pay for the test and have it done before the end of the day I would go to war for him with the negative results. I never heard from him again. Busted! Back before companies were so staunch in their position on this I actually got a company to say they would allow a retest done in a timely manner. I ordered the test and the client just somehow couldn’t get a free 30 seconds to whiz in a cup for nearly 3 weeks. The results were negative and so was the response from the insurance company. Three weeks is plenty of time to clean your system and there was nothing timely about 3 weeks. This brought another emotional outburst from an underwriter who had approved the case at standard smoker rates and upon receipt of the less than timely results, declined to offer the man insurance.

Keep in mind that if you use tobacco other than cigarettes and admit it to your agent and on the application and exam, a good agent will take that to a company that will offer non smoking rates. Cigars, pipe smoking and chew can all get non smoking rates from some companies.

Bottom line. Why do people lie about tobacco use on life insurance applications? They know the difference between smoking and non smoking rates. They know that they would pay 2-3 times more as a smoker so they lie and think they will get away with it. Then they get busted and tick off an underwriter and if they are lucky they may get an offer 5 times higher than non smoking rates.