Don’t Bank On Life Insurance Reconsiderations!

Life insurance company reconsiderations are thrown about the industry like the success of them is common place and they are for all intents and purposes, a shoe in. The kind of reconsideration I’m talking about is when a smoker becomes a non smoker, someone with high cholesterol gets it under control or someone who has been losing weight finally hits that point where they should qualify for a better rate class.

It’s just not practical to assume that it is as easy as it sounds. “Call me when you’ve been a non smoker for 12 months and we’ll get you a reconsideration to non smoking rates”! First let’s throw a reality damper on reconsideration. There is very seldom a reconsideration given until the policy has been in force a year, two years with some companies. At that point your labs and underwriting are no longer valid, so while they may be willing to reconsider, say, your high cholesterol from a year ago, they aren’t going to just let you get a lipid panel and drop your rate accordingly. What if you got your cholesterol down by using Aunt Susie’s Wicked Liver Damage Elixir and your cholesterol is now 172 but your ALT is 140 and your AST is 150? Fair game on a reconsideration is they get to check you out and see if anything else has changed.

There are reconsiderations that work out. I currently have a client who said on his application that his father was diagnosed with prostate cancer prior to age 60. During the application process he had a talk with his mother and while she couldn’t remember exactly, she was thinking it was after 60. The answer to that question means the difference between preferred plus and preferred approved rates. The problem is that the answer is buried somewhere in the VA medical archives and will likely take a month or two to find. This company took what I consider to be the underwriting high road. They put the policy in force as approved at preferred based on the answer to the question on the application but allowed the client up to six months to provide medical records changing the age of diagnosis to after 60. If he finds that evidence they will immediately change the rate to preferred plus without waiting a year or requiring any further underwriting.

I’m in no way saying that if you’ve made an improvement that should better your rate you should forget reconsideration. I’m just saying don’t bank on it. Don’t go on vacation and spend all that money you’ll save ahead of time. The reconsideration does have the upside of being able to change your rate class at the age you were originally approved rather than the age it is done and succeeds.

Bottom line. Reconsideration is always worth a look, but I always advise clients that if they are going to have to go through an exam anyway, shop it and make sure you aren’t leaving even better news on the table by staying with the same company. In other words you might have the best smoking rate available, but that company’s non smoking rates don’t stack up that well against the competition. Look at all the angles. If you have any questions or want to make sure your reconsideration will do what you want, call or email me directly. My name is Ed Hinerman. Let’s talk.