Foreign Travel Evolution (Revolution) In Life Insurance!

For as long as I’ve been in the business, not quite 100 years but working on it, foreign travel has been fair game for life insurance companies underwriting criteria. In the words of an underwriter I spoke to several years ago, “it seems prudent for us to consider increased mortality risk for people that travel to unstable areas or areas that are known for unsafe health conditions”.

For as long as I can remember underwriters have used as their core base of countries that are automatic declines, those that show up on State Department travel warning list. When you look at this list you can certainly understand why your mother and most life insurance underwriters might have some concern. The problem that has surfaced lately and many state insurance commissions are addressing is, that while it may present a scary sounding list, there is no mortality statistics to back up a higher rating or decline in many instances.

An even sketchier issue arose when companies also took adverse action based on the travel alert list. This list is fairly short right now, but at times has been quite lengthy and has included countries that will just leave you shaking your head. On the list today are notably scary places like Mexico and China. One of the China alerts rightly suggests that you exercise caution in travel to the area of the country impacted by the recent earthquake. But the other alert simply alludes to the fact that foreign place are kind of scary and you might want to be very careful when you go there.

I believe the State Department is well intentioned in these lists, but when places like Mexico and, in the past, such notables as Belize and Costa Rica, are used by insurance companies as ways to rate life insurance applications, something has gone askew. I remember a case a few years ago being declined because of a planned vacation to Belize. When I asked the underwriter what he was thinking, he mentioned that Belize was on the alert list because of the danger of kidnapping and murder of tourists. My wife and I honeymooned there and have been back a few times since then. The fact is that a tourist had been robbed and killed several years before we started going there, making it 10-15 years prior to this underwriter’s action. We reapplied with another company and got the rates we expected to get the first time around.

Anyway, a shift is coming and in several states has already started. On the subject of foreign travel, in many states, a company now either can’t consider the foreign travel in their underwriting, or as part of any adverse decision, has to produce documentation to back up any perceived mortality risk.

I am for this and in some instances, against it. It will hopefully clean up petty issues like travel to Mexico, Belize and China, but in my mind the companies should have the discretion to refuse to accept the risk of someone traveling on vacation to Afghanistan. While vacation is probably not the right example, civilian workers and missionaries do travel to dangerous places in substantial numbers and the risk is real, not fabricated.

Bottom line. An independent life insurance agent can help you wind your way through the maze, and the truth is, in most cases, get foreign travel put in the proper context.