MIB, the Medical Information Bureau, has always been kind of this covert secret group that snatches information whenever you apply for life insurance or health insurance. MIB has been blamed for a lot of things and I thought it would be helpful to demystify their role and function in the underwriting process.
From their website, “MIB Group, Inc. (“MIB”) is a membership corporation owned by approximately 470 member insurance companies in the US and Canada. Organized in 1902, MIB’s core fraud protection services protect insurers, policyholders and applicants from attempts to conceal or omit information material to the sound and equitable underwriting of life, health, disability income, critical illness and long-term care insurance.”
I think one of the biggest misconceptions about MIB’s part in life insurance underwriting is that it is solely there to protect life insurance companies. That is and should be an important function. Without a database of health issues that have been identified it would be far more possible for a client to fraudulently omit health information from an application. While not the norm, it is certainly possible just due to the volume of underwriting that if MIB didn’t exist, the underwriter might not uncover information in medical records that would impact the underwriting outcome.
MIB is also a check and balance for agents and the manner in which we conduct our business. Like any financial services industry there are representatives who have figured out ways to game the system by simply omitting relevant health information on applications. I have talked to clients who have explained that an agent has told them that they don’t need to include that information on an application because it will come out in medical records anyway. Just a personal FYI. Any agent that doesn’t encourage you to spill your guts about your medical history on an application isn’t doing you any favors. It’s far better to give more information than an underwriter doesn’t need and let them discard irrelevant details, than to leave them short on details that could be relevant.
Probably the single biggest misconception about what MIB reports to insurance companies is what action was taken on a previous application. MIB doesn’t know and doesn’t report whether a life insurance application decline occurred. MIB does provide information on whether you have previously applied for life insurance. So, the temptation to simply answer no to an application question about previous applications will result in the company coming back and saying that they have information that you have previously applied and ask you for the details.
Even though I have beat this to death in the past I think it is important to note that one life insurance company doesn’t underwrite based on what a previous company did. They underwriter based on the information they have and even if you were declined for life insurance by company A, company B is entirely likely to see it differently. Turning declines into approvals, while not the easiest work in the world, is hardly insurmountable.
Bottom line. Apply for life insurance boldly and honestly. Only work with agents who probe for and gather all of your health history ahead of time and then take the time to shop your case.