Of course that questions begs another question. Has common sense ever been a standard of life insurance underwriting?
The real answer is yes. Absolutely yes. Before the big changes that came with the shrinking number of reinsurance companies and before we were traumatized as a nation financially…..back in the good old days about three years ago, common sense was abundant. When the options for reinsurance began to disappear companies were forced to dance to the tune of whoever was doing reinsurance on their business. They were no longer free to wander on and off their own underwriting guideline pages, forced to meet someone else’s expectations.
I’ve talked a lot about United of Omaha’s Fit test credits on term insurance and how they have lowered premiums substantially on rated life insurance policies. Fit test credits are all about giving credit for life style, rewarding people for things like never having smoked or exercising regularly.
Now Banner Life has jumped on the bandwagon, but has extended the credits to the best rate classes and not just for help on rated policies. Their goal is to make sure that if someone is healthy in all aspects but one, they don’t get nailed for a 30% increase in rates for just that one thing. They’ve gone big in some of the most exasperating underwriting areas, build, cholesterol, blood pressure and family history. You can truly be a picture of perfect health and any one of these things not being perfect, under their old rules, would have knocked you down one or two rate classes.
As an example, a 47 year old guy with no health issues at all, but with a family history of his father dying at age 50 of a heart attack would normally pay $2225.00 annually for $1,000,000 of 20 year term. With their new underwriting this person would qualify for a rate of $1345.00.
If his father was still living and this client had a total cholesterol of 250 but lots of HDL (good cholesterol) and had a cholesterol ratio of 3.5, instead of paying $1615.00, he would again qualify for $1345.00 if the high total cholesterol was the only issue.
Bottom line. I salute companies that have the guts to use common sense and Banner Life is to be commended (and used) for these changes. Banner continues to be a leader in term insurance rates and they have just recently come out with a very competitive no lapse guarantee universal life, and unlike some companies they are offering this great new UL as a conversion option on their term products. 2010 is going to be a good year for Banner and those who get their insurance through them.