In the last six or seven years NY life insurance has managed to lift itself out of the dark ages, and while still not as robust and open as the other 49 states, progress is still progress.

I remember back when I first got licensed in all the states it didn’t take long to wonder why I had included New York. The product selection and number of companies were both anemic. Some of the best impaired risk underwriting companies in the business weren’t licensed to do business in New York because it was such a headache.

Probably the pinnacle of ridiculous was their procedure whenever a replacement was involved. If a client told me they wanted to replace an old policy, even one that was past its’ guaranteed level premium period which makes it a no brainer, it triggered a two month procedure before we could actually process an application. It started with a, I kid you not, 8-10 page policy information comparison that had to be filled out and sent in to the company that they would be applying with. It would go through a review by that company to make sure the agent was recommending an appropriate replacement. This part had to be completed by the new company within two weeks

From there it would go to the company whose policy was being replaced. They had four weeks to evaluate and respond to the replacing company as to whether they felt it was appropriate. This also gave them four weeks to send an agent out to try to win the business back. Upon completion of this circuitous review and accompanying harassment of the client, it was finally time to get an exam and application going. This was NY life insurance at its’ finest.

As I mentioned the choice of companies and products available in New York left much to be desired. New York even lagged years behind the rest of the country in implementing new mortality tables. When every other state was allowing term products to be guaranteed to age 80 and then 85, New York held fast for several more years to 75 as the maximum guarantee.

The fact that there were better prices and better products available outside New York was just downright unfair. Companies were literally intimidated by the New York state insurance commission. I worked on a case in New York, one that took aggressive impaired risk underwriting. We weren’t able to get an approval from any companies in New York. I mentioned to the client that it was too bad he didn’t have a home outside New York, because I had a few companies that were interested in working his case that weren’t available in New York.

Well, it turned out he had a second home in Pennsylvania so we applied through the other companies using his PA home address. When the application went in it was kicked back within a few days because the client had a New York driver’s license and there was an MIB (Medical Information Bureau) report showing he had applied for life insurance in New York. They refused to process the case even though there was no law in New York or PA that made it an illegal application. They just said it was against their internal policy to write insurance on New York residents outside of New York. Color me stupid, but someone has to be holding a gun to the head of an insurance company to get them to pass up business.

Bottom line. That was then. Things have changed, some. There are now products available in New York that weren’t before like 30 year terms and term guarantees to age 85. The horribly invasive replacement requirements are gone. The state commission still believes it has the right to keep NY life insurance clients from going out of state, but today there are far fewer reasons to do so.

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