Saturday, August 10, 2013

Declined For Life Insurance? Not A Bad Place To Start!

I won't pretend that being declined for insurance doesn't carry a sting. A common thought that comes with the decline is, "Do they think I'm about to die, or what?"

Some perspective might help and maybe a little insight into how life insurance companies decide what will drive approvals and declines. It's important to know that not all companies work from the same guidelines. What drives one company screaming into the dark is exactly what another company is looking for to balance out their risk pool. A case that doesn't even get to the underwriter's desk at one company because, for instance, bipolar disorder was mentioned on the application, will not even slow down at another company as they work diligently toward approval.

A decline is not so much a statement about your health or mortality as it is a statement about that particular company's marketing philosophy and their personal risk tolerance. Before your application every came through the door, and the agent you're using should know this, the company they chose may well have a policy of automatically declining things like type 1 diabetes or a history of breast cancer.

I've said it many times, but it bears repeating....the wrong agent taking your business to the wrong company will end with bad results almost every time. Which begs the question, how do you know if you are partnering with the wrong agent and how do you know if they are steering you to the wrong company? The task of making sure you're in the right hands, while it seems daunting because you're not in the business, is really pretty easy.

You understand your medical or mental situation from having talked to the doctor, sometimes for years. When you talk to an agent you should get the feeling that they also understand the variables of your impairment. The questions they ask should seem relevant and if they ask a question that you don't know the answer to, they should be able to fully explain why the question is important and why the answer plays a key role in underwriting. First clue that you've run into the wrong agent is if they don't ask enough questions. They have to know what will drive an underwriter's decision. It's their job.

Beware the agent that shoots from the hip with quotes on serious impairments. Most agents can get away with that on less significant history such as hypertension, high cholesterol or family history, but if you have a more serious history of say, heart disease, cancer, diabetes or depression, the agent shouldn't provide quotes until they have presented, informally, all of your information to their underwriter (if they work for only one company) or all of the underwriters they work with if they are independent agents.

A sample email that I send out to multiple companies might go something like this. "Proposed insured born 3/14/53, 5'10, 175, non smoker. Diagnosed 10 years ago with type 2 diabetes. Has full blood workups quarterly. Most recent labs showed A1c 5.6 and all kidney functions normal. There are no collateral health issues. Good family history. Takes Janumet and Actose and preventably takes Propanolol and Simvastatin. Last blood pressure was 117/76 and most recent cholesterol was 142 with HDL 50. Looking for $500,000 term."

I will generally send that email to the companies that I know have the best underwriting philosophy on type 2 diabetes. On average I will get 10 to 15 answers back telling me what rate class to expect on approval if all the facts are accurate. I provide quotes to the client from the best 1 or 2 companies. I always double check the email with the client before sending it to make sure it is accurate and nothing has been left out. When an application goes in the email from the underwriter is attached to the application. This ensures that it will get back to the same underwriter that previewed it and also makes it virtually impossible for them to change their minds unless they find some important information that wasn't divulged to me and therefore wasn't provided on the quote request.

Your agent should be willing to shop your case in this fashion, willing to show you the outgoing email and also the responses from underwriters and be able to explain why they picked the company they did. With that process in play you can be comfortable that you have an agent that has been there, done that and has every intention of winning your business by providing the best possible outcome.

Bottom line. Almost every client we serve has been declined. That's why they come to us. Occasionally a decline is legitimate, but I don't drop that bomb and just leave them. I let them know why it isn't currently insurable and what it will take for them to be insurable and I set a followup to check in with them and see if they have done what it takes to warrant another look at it. Sometimes we will simply shop it every 6 months to a year just to see if an underwriter has changed their stance or possible a company has hired a new underwriter that will open some doors. Don't give up!

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