Greg Horak

Halloween is the quintessential celebration of all that is spooky and scary but even with the holiday being over, financial professionals may still have year-round fears about reinsurance. Submitting a life insurance application large enough that it must enter the reinsurance marketplace shouldn’t bring up those same fears that ghosts and goblins do. At one point I believed that the biggest fear an advisor had was the conversation with their high-net-worth clients about life insurance being an integral tool in their estate plan. But after 25 years in the industry, I’ve learned that their greatest fear is the feeling of helplessness and ignorance when the word reinsurance is uttered. The good news is, unlike the zombies and ghosts of Halloween, those reinsurance fears can be put to rest for good by the end of this article.

So, what exactly is reinsurance?

Reinsurance is simply an arrangement in which one insurance company, known as the “reinsurer,” provides coverage to another insurance company, known as the “ceding insurer.” The primary purpose of reinsurance is to help the ceding insurer manage and mitigate risks associated with the policies it has underwritten. By ceding a portion of its risk exposure to a reinsurer, the ceding insurer can protect its financial stability and reduce its exposure to catastrophic losses.

There are also a few terms that must be clarified in order to understand the underwriting process when reinsurance comes into play.

Internal Retention Limit
This is the amount of death benefit that an insurer can issue on an individual without ceding any of the death benefit to a reinsurer. In the event that the insured passes away, the insurer is solely responsible for the death claim if the insurer retained the entire death benefit.

Auto-Bind Limit
Even if the amount applied for is over the insurer’s retention limit and they must cede part of the death benefit to a reinsurer, this process is usually transparent to the broker and to the proposed insured. This is due to auto-bind agreements between the ceding insurer and the reinsurer. For example, if the auto-bind limit between a ceding insurer and a reinsurer is $20 million, then as long as the total amount being applied for is within this $20 million limit, the ceding insurer can approve the policy without the reinsurer reviewing the file. However, if the amount being applied for is over $20 million, then the entire file must be sent to the reinsurer for review, and the reinsurer must agree with the ceding insurer’s underwriting opinion before a policy can be issued.

Jumbo Limit
The jumbo limit is the amount of coverage inforce and applied for with all carriers on an individual’s life. The most common jumbo limit with most carriers is $65 million. To illustrate this, if your client has $35 million inforce and wants an additional $35 million, this exceeds the jumbo limit (assuming $65 million is the jumbo limit). In this example, one of the biggest mistakes that can be made with respect to jumbo limits would be to submit formal applications with multiple life insurance companies for $35 million each, with the intent to accept the single best offer. This can cause significant problems when multiple ceding insurers contact their stable of reinsurers to reserve what they believe is $35 million of capacity but the reinsurers are receiving requests to reserve a total of $70 million, $105 million, or even $140 million of capacity.

Now that we have established the basic terminology of reinsurance, what is the best way to proceed with a case that exceeds a carrier’s auto-bind or jumbo limits?

The first step is to make sure you work with a BGA that understands the large-case market. Next, have a conversation with your BGA about the specifics of the case. The most basic pieces of information that your BGA should ask you include:

1. What is the proposed insured’s full legal name?
2. What is the proposed insured’s date of birth?
3. How much life insurance does the proposed insured already have in force and with what insurance companies?
4. How much of their in-force life insurance, if any, will be replaced?

The reason your BGA needs the answers to #1 and #2 is that the first thing they should do is contact the underwriters at the top carriers that you are considering writing the application with and ask them to check for reinsurance capacity. This means that the underwriter at the ceding insurer will contact each of their reinsurers and give them the proposed insured’s information. The reinsurer will then check to see if they already have life insurance on them through other ceding insurers. The reinsurers will then tell the ceding insurers how much death benefit they can contribute to the total overall amount. Note that this amount can change prior to a policy actually being issued for a number of reasons, including but not limited to a worse-than-expected medical rating, a lack of U.S. citizenship, or due to some avocations or occupations.

For example, we had a recent case where the proposed insured already had $40 million inforce and wanted as much additional life insurance as he could obtain. His net worth was approximately $200 million. The ceding insurers we spoke with then checked with their reinsurers and the one that was able to obtain the most capacity came back with a figure of $62 million, including the ceding insurer’s own retention. Every ceding insurer we checked with came back with a slightly different number due to the fact that the ceding insurers’ retention limits differed and the mix of reinsurers that the ceding insurers had agreements with differed.

The next step is to submit an informal inquiry to the ceding insurers that you’re considering applying with. Submitting an informal on these types of cases is almost always the best way to proceed in order to avoid reinsurance capacity issues as mentioned. The ceding insurer will fully underwrite the case (other than running MIB, MVR, and a few other database checks) and will give us a very good idea of what rate class they should ultimately be able to offer. This process will also bring up any underwriting concerns that might exist. If any significant underwriting concerns do arise, the underwriter at the ceding insurer can check informally with their reinsurers to confirm what their thoughts are on the issue. Once we have informal “offers,” a formal application can be submitted to the one ceding insurer that you and your BGA believe will be the best fit for the desired objectives.

However, when the formal application is submitted, there are still additional hurdles before a policy can be issued. The ceding insurer will package the entire file including medical records, lab results, MVR, MIB, and database results and send the file to each of the reinsurers. The reinsurers will then fully underwrite the file in order to make a formal offer. Underwriting problems don’t normally arise at this point but it’s never out of the question.

The case that I referenced did come back with one such problem. The proposed insured didn’t admit to a medication that they took or to the doctor who prescribed the medication. The information came up on the Prescription Database Report which is only ordered after a formal application is submitted. The medication wasn’t significant with respect to insurability but one of the reinsurers wanted us to obtain these additional medical records. Neither the ceding insurer nor any of the other reinsurers felt they needed these records. We therefore had three options:

1. Have the underwriter at the ceding insurer call the underwriter at the reinsurer and have a conversation about the need for these records and determine if the reinsurer can provide an offer without the records.
2. Proceed without the $8 million of capacity that the reinsurer who wanted the records was offering.
3. Obtain the medical records. But if we did, the records would then have to be sent to all of the reinsurers, not just the one requesting them.

An attempt to get the requirement waived should always be the first option and, in our case, the chief underwriter at the ceding insurer was able to get the reinsurer to waive the additional records and they proceeded with the approval. This is ultimately why it is so important for the underwriters at the ceding insurers to have good working relationships with the underwriters at the reinsurers.

The last step of the process circles back to the first definition provided…that of internal retention. Even after we’ve exhausted reinsurance capacity, carriers can still offer additional coverage up to their internal retention limits. Some carriers’ retention limits are as small as $250,000 but some are as large as $10 million or more. So, we can then piecemeal as much additional coverage as possible using multiple carriers’ internal retention limits.

Knowledge of the preceding steps when dealing with reinsurance is incredibly important but it’s much more important that your BGA is familiar with this process as they will be working directly with the ceding insurer. Make sure that they’ve worked in the large-case marketplace in the past; make sure that they have close working relationships with the chief underwriters at the different ceding insurers; and, make sure that they understand the difference between retention limits, auto-bind limits, and jumbo limits and what each ceding insurer’s dollar amounts are that correspond to each of these. Then the next time you meet with a high-net-worth client, you should be far more knowledgeable of the steps involved when reinsurers must get involved, and far less fearful that you might take the wrong step.

Advisors constantly tell me that asking their clients about their medical histories are some of the most uncomfortable conversations they have. Many advisors’ customers are close or extended family, life-long friends, or friends of friends, and asking them detailed questions about their medications, surgeries they’ve had, how much alcohol they drink, or if they use tobacco, are all delicate subjects. This is a skill that even doctors spend years trying to perfect.
But the most successful advisors that we work with have become experts at explaining to their customers how this information will help to get them the most competitive offer possible. In no particular order, I’ve put together what I consider to be some of the least intrusive and most important questions that will get you the best bang for your buck when pre-underwriting your clients.

1. Family History
Asking about family history is one of the easiest and least intrusive questions that can be asked and one that many advisors don’t realize can dramatically affect the rate class that will ultimately be offered. When asking your client about their family history, you should ask about both parents and siblings; about ages of diagnosis of both cancer and heart disease, and the age at death if a parent or sibling did pass away from either cancer or heart disease.

Almost all carriers exclude their best three rate classes if either parent of the proposed insured has passed away prior to age 60 from heart disease. Note, however, that the rules vary between carriers if there’s only been a diagnosis of heart disease (no death), so always ask for the age at the time of diagnosis; and if there has been a death, it’s important to know their age at death as well.

The rules for cancer are more nuanced. Over the past several years the type of cancer that a parent or sibling was diagnosed with has become very important to many carriers. Many carriers are now only concerned with cancers that have a strong familial/genetic component. Some of these include, but aren’t limited to, breast, colon, prostate and ovarian cancer. Some carriers will also disregard a family history of cancer if the parent or sibling had a gender-specific cancer. For example, if an applicant is female and her father had prostate cancer, many carriers will ignore this when making their underwriting decision.

One last item regarding family history. There are a handful of medical conditions where only a family history of the condition can sometimes cause a decline. These include, but aren’t limited to, Polycystic Kidney Disease, Familial Adenomatous Polyposis, and an extremely strong family history of breast cancer with multiple first-degree relatives who have been diagnosed with breast cancer.

2. Patient Portal Lab and Test Results
One of the newest and best tools for pre-underwriting is also one of the best tools that consumers can use to take charge of their own healthcare. The online patient portal that most large healthcare systems now offer is a revolutionary way for your client to obtain invaluable medical information to help us pre-underwrite them for life insurance. Obtaining their last few sets of blood and urine test results and copies of any other test reports like colonoscopies, EKGs, MRIs, or echocardiograms can give us a huge jump on determining a best-case rating and which insurance companies will be the most likely to make the best offer. Even obtaining just the most recent blood test results that include blood glucose, cholesterol, kidney functions and liver functions can give us an inordinate amount of useful information.

3. List of Medications
Sometimes getting a list of your client’s medications can be awkward, especially if the proposed insured is taking an antidepressant or anti-anxiety medication or a medication for a condition that they feel is embarrassing. Most people have no problem providing a list of medications if you explain to them that the insurance company will eventually obtain a report via the Prescription Database that is ordered on every client. And if we have a list beforehand, we can again determine if there will be any underwriting challenges at any particular insurance carrier.

A list of medications also gives us a lot of information that the client might purposely withhold about their medical history or withhold through ignorance of their own health history. Some people take medications without knowing why and, as a result, don’t mention a condition that they have. Some tell us that they have a particular medical condition that they don’t actually have. Part of the reason for this is many doctors use euphemisms with their patients, such as “high sugars” for “diabetes.” The medications that have been prescribed help us investigate and determine what actual diagnoses have been made and sometimes we can even estimate the severity of the condition.

We can also avoid unnecessary declines if we know the medications prior to applying. A good example of this is the medication Naltrexone. If you google this medication, it says, “[Naltrexone] can help prevent relapses into alcohol or drug abuse.” This is absolutely correct and, until recently, this is exclusively what this medication was used for. Any note in medical records mentioning it, or if it came up on the Prescription Database report, would have caused an automatic decline. Some doctors however have started to use Naltrexone to assist in weight-loss, and there are now some carriers that will dig a little deeper and determine the exact reason that this medication is being used, and if there is no indication of alcohol or drug abuse offers are now possible.

Knowing if someone uses or has used a medication that might be used for multiple purposes can save weeks or even months in underwriting by applying with a carrier that will take the extra step and not issue an automatic decline.

4. List of Surgeries
This one may sound self-evident, but I worked on a case recently where the medical records stated that the proposed insured had his prostate removed several years earlier due to cancer. Strangely enough, this was the first indication we received that he had a history of cancer. The proposed insured wasn’t purposely misleading us…he truly didn’t understand that he had had cancer. We’ve found that doctors will many times use euphemisms with patients, and patients many times innocently hear what they want to hear.

But if, for example, we do discover prior to applying that someone had their prostate removed, the next obvious question that we can ask is, “Why?” The client still might not admit to a history of cancer, but at least we have a clue that they might have had a very low stage tumor and give alternative quotes. One quote would assume that they did have cancer and the second quote would assume they didn’t.

5. Cigarettes vs. Chewing Tobacco vs Cigars vs Marijuana
Tobacco rates with most carriers are two to three times the cost of non-tobacco rates. The price can quadruple if the best non-tobacco rate class was originally quoted. Therefore, obtaining the most accurate and detailed tobacco-use history up front can keep you from applying with the wrong carrier and spending weeks in underwriting before ultimately re-applying with the carrier that makes the most sense.

Determining the delivery system of the nicotine, the frequency of use, and the date of last use are the primary pieces of information that should be collected. This will help ensure that we quote the appropriate and most competitive premiums.

The rule with most carriers is that a single cigarette smoked within the past 12 months will cause an offer at tobacco rates. As of the date of this article, I’m aware of only one company that can offer non-tobacco rates if somebody smokes fewer than 24 cigarettes per year.

Chewing tobacco is treated identically to cigarettes at most carriers, but not all. A few carriers will offer non-tobacco rates, even with a urine specimen that’s positive for nicotine.

Most carriers will offer non-tobacco rates to occasional cigar smokers, but every carrier has slightly different rules about how many cigars per month or year are allowed, and whether the urine specimen can be positive for nicotine.

Finally, marijuana, which of course is not tobacco, but the rules are similar. The date marijuana was last used and the frequency of use will not only determine what rate-class each carrier can offer, but whether the client will be rated at tobacco or non-tobacco rates.

6. Dates
One of the most important pieces of information that advisors forget to ask are dates. Dates of diagnosis, dates of last treatment, dates of surgery, dates of medication use, etc. The ratings for many medical conditions are based on how long the proposed insured has had a particular condition or the date of last treatment. Therefore, it’s important to always try to pin down the most accurate dates for all information that you receive. If the client can’t give an exact date, an estimate is better than nothing. Knowing that someone was last treated for cancer around 2014-2015 is better than not having any information about the date of last treatment.

7. Driving History
An unexpected rating due to your client’s driving history is one of the easiest pitfalls to avoid by asking only a few simple questions. Many advisors think that only DUIs can cause extra ratings, but multiple non-DUI violations can be just as problematic. By obtaining details about every driving violation over the past five years, we’re able to choose the right carrier with which to apply. Remember, just like with medical underwriting, not every carrier has the same underwriting rules for driving history.

If your client has had any speeding tickets, then one additional question you should ask them is how much over the posted speed limit were they traveling? Carriers do rate differently if the violation was only five mph over the limit versus if the violation was 20 mph over. As noted in the previous section, it’s just as important to get dates of each driving violation that your client has had over the past five years to the best of their recollection.

8. A List of Doctors and Why They Were Seen
One more way to assist your client’s memory is to ask them for a list of doctors that they’ve seen over the past five years. Of course, many people won’t remember every doctor’s name or when exactly they saw them. If, for example, they tell you that they saw a dermatologist but they didn’t mention any dermatological medical history, this is an excellent way to collect additional medical history.

Getting this information can also help expedite the application process. If, for example, the insurance company finds a doctor on the Prescription Database report who prescribed a single fill of a narcotic pain medication a year ago and the client has already told us that they were prescribed pain medication for a broken foot a year ago, this could save time during the underwriting process that would otherwise be spent trying to clear up this information.

9. Results of Prior Applications
Obtaining information about offers on recent applications is helpful for two reasons. If, for example, we have what we believe to be all of the pertinent medical information on a client and we assess them as being Standard N/S, but they applied with another insurance company recently and were rated Table 6, then we can be relatively certain that we don’t have all of the pertinent medical information. And vice versa…if we have information that leads us to quote Table 6, but the client was recently offered Standard elsewhere, then we have to ask ourselves, “Are we missing additional information that would change our assessment; are we interpreting something incorrectly; or did the other carrier interpret something incorrectly?”

If another carrier recently offered your client Table 2 or Table 3 and we’re assessing them at Standard (or vice versa) then that’s very likely a difference in underwriting philosophies between the two carriers. Large discrepancies, however, can be used as a guide to let us know something isn’t right.

Another important reason to have details about recent offers is to use this information to negotiate with the second carrier to get a better offer for the client. Remember, insurance companies are competing with each other. They’ll never make unwise or irrational underwriting decisions, but if we can make a case for why your client should be offered a better rate class than what their competitor offered they’re more than happy to do so.

10. Use your IMO’s In-house Underwriter
The in-house underwriter at your IMO or BGA can be your best resource to obtain the best questions to ask your clients to ultimately get the most accurate quote. There’s nothing worse than having the underwriting offer come back other than applied for and having to ask for more premium than expected when you deliver the policy. Getting all of the important information, or at least all of the information that’s possible to get, up front can alleviate many headaches later on, especially if your client’s premium tolerance is inflexible.

If your client has a history of cancer, diabetes, heart disease, epilepsy, or any other specific medical condition, the in-house underwriter at your IMO or BGA should be able to get you the appropriate questions to ask in order to quote the case the right way the first time.

Those unhappy surprises during the underwriting process that can cause a delay, or even worse an extra rating or decline, should drop significantly if you follow the 10 steps I’ve outlined. As a result, the need to re-write an application with a second carrier should be a problem you no longer have and your business will continue to grow as a result.

Image by Gerd Altmann from Pixabay

When I started working in the life insurance industry twenty-five some odd years ago the technological revolution that started in the late 90’s and took off like a rocket at the turn of the century hadn’t yet started. Email existed and some of the employees at life insurance companies had email accounts…but most didn’t. The internet existed and some of the life insurance companies had websites…but most didn’t. Google didn’t exist, Amazon didn’t exist, and Facebook and Twitter didn’t exist. And we still worked in an environment where we faxed paper applications to home offices and medical records were paper and not in an electronic format.

Slowly the technology that we all now take for granted took over the world, including the life insurance world. Insurance companies and advisors slowly started using and relying on email. Insurance companies slowly started to design websites that provide advisors and customers essential tools and information about their products and services. Over the past two decades, we’ve evolved from a time when every document required an original signature…to a time when drop-tickets are submitted, voice-signatures are received, and e-signatures are accepted at delivery.

But the technological leap that’s occurred over the last twenty years hasn’t just impacted the processing of applications. That was the first step and, in my opinion, the least important step. It was the way many carriers navigated a very steep learning curve that made them comfortable enough to start using the technology that existed (and has yet to exist) to reduce underwriting times and the need and cost of certain underwriting requirements. This new technology is being used to allow insurance companies to waive certain requirements, which makes your job easier and makes applying for life insurance less painful to your clients.

As technology and public records become more ubiquitous throughout society, industries from banks to online book sellers, and from supermarkets to life insurance companies, are using these new tools to cut costs and make better and faster decisions. This brings us to two of the oldest resources that insurance companies have used to help them obtain accurate and complete information on their proposed insureds…the MIB and MVR.

The Medical Information Bureau–MIB
The MIB has been used for years by life, health, disability, long term care and critical illness insurance companies and it’s the tool that seems to be one of the most misunderstood by advisors. MIB is an entity that collects and stores medical information that its member insurance companies collect during the underwriting process. If the proposed insured then applies with another member insurance company in the future, the prior medical information is shared with this new company.

The first common misconception that many advisors have about MIB is what information is reported to it. The information that’s reported to MIB isn’t specific information like actual lab results or test results…it’s relatively vague and in code form only. For example, a code that’s reported to MIB might indicate something like “Abnormal Blood Glucose Result” or “Elevated Blood Pressure” but wouldn’t give any more specific information than this. It’s the requesting company’s job to then investigate this information by either re-questioning the proposed insured or by reaching out directly to the insurance company that reported the code to MIB.

Another common misunderstanding many advisors have about MIB is that MIB indicates what action the reporting company took regarding the information that’s been reported. In fact, MIB doesn’t indicate if the reporting company offered a rated policy, declined to offer at all, or took no adverse action based on the information that was posted.

And lastly, MIB does not collect information from medical records or directly from doctors outside of the reporting done by insurance companies. If an individual has never applied for insurance in the past, then they will not have an MIB record.

The Motor Vehicle Report
The MVR report has also been used for decades and is simply a report of traffic violations along with dates of each violation and dates of conviction or acquittal. Note that MVRs can sometimes be confusing given the fact that they come directly from state agencies that may or may not have the most up-to-date technology. Therefore if an insurance company makes an adverse action based on an MVR report, we always suggest that you verify with the proposed insured the dates of every violation noted in the decision.

The MIB and MVR have been used for decades and their efficacy and impact on underwriting is tried and true. The tools that I’ll now review are relatively new and many are unknown to many advisors. Knowing how these tools work and what information they provide about your clients will help you communicate better with your clients and potentially save a case.

Clinical Laboratory Database
This is a relatively new tool that allows insurance companies to pull blood and urine test results that were run by a proposed insured’s personal physician. This gives the underwriter great insight into many facets of the proposed insured’s health history such as possible chronic conditions like diabetes, hyperlipidemia, or chronic kidney disease. It also gives the underwriter an idea of how often the proposed insured gets medical care, and how in-depth and extensive their medical care has been. Many doctors also run different types of tests than those run on the insurance exam. Tests like CBCs, thyroid panels, and other specialized tests that aren’t done by the insurance companies. These results can give underwriters even greater insight into the proposed insured’s health history.

Prescription Database
Another tool that’s very similar to the Clinical Laboratory Database Search is the Prescription Database Search. This is a database that pulls prescription information from thousands of pharmacies across the country. This report gives the underwriter the names of medications prescribed to the proposed insured, the initial date those medications were prescribed, the date the prescription was last filled, how many times the prescription has been filled, and the physician who prescribed each medication.

This report in conjunction with the Clinical Laboratory Database Search can again give underwriters an amazing ability to put a picture together of an insured’s health history and hopefully negate the need to obtain medical records. For example, if an individual’s Clinical Laboratory Database Search shows that they have a history of elevated blood glucose, and the Prescription Database Search shows that Metformin was prescribed two years ago and has been filled regularly since then with normal blood glucose levels on the Clinical Laboratory Database Search since then, the underwriter can many times determine the rating for this proposed insured’s diabetes without obtaining medical records.

Claims Data
Claims data is one of the newer tools that underwriters can use to determine a client’s medical history prior to ordering medical records, therefore allowing them to potentially waive the medical records entirely. Every time a patient sees their doctor, a billing code, sometimes called an “ICD-10 Code” or a “Healthcare Common Procedure Code,” is noted in the medical records. These codes allow the medical provider to bill the patient’s health insurance company. Life insurance companies now have access to these billing codes and can therefore get a relatively clear picture of the insured’s medical history without obtaining their medical records. One of the primary drawbacks to this new tool however is that the underwriter doesn’t get a clear picture of the attending physician’s plan of care or a clear picture of the patient’s compliance with that plan of care which can sometimes be just as important as the actual diagnosis.

Electronic Medical Records
This is probably the newest tool that insurance companies are using in an effort to shorten underwriting times. The use of EMRs really started out of necessity when the COVID pandemic hit in early 2020. As we all know, obtaining medical records is usually the single largest delay in the underwriting process. It can sometimes take several months to receive medical records and COVID made this even worse. In some instances, the pandemic made it impossible to obtain a client’s medical records and electronic medical records became a potential solution to this problem. Note that the technology is still being perfected, but it allows copies of a patient’s records to be pulled from a healthcare facility’s computer system without waiting for a human being to process the request.

One drawback, however, that has limited the use of this new technology is that not all healthcare facilities have the technology on their end to support it. The second issue is that electronic medical records don’t normally include everything that’s included in a patient’s actual medical chart. There’s also a widespread misunderstanding by advisors that electronic medical records are the same as what a patient can obtain from their online patient portal, but this usually isn’t the case. We usually receive much more information from electronic medical records than what’s in the online patient portal that is accessible by the patient themselves.

Conclusion:
Big data is already helping to expedite underwriting and allow insurance companies to require fewer medical requirements. And as the insurance companies gain more experience over the next several years using this data, they’ll come to depend more on it and less on invasive and time-consuming activities like exams and obtaining traditional medical records.

One drawback to advisors however is the lack of clarity about where specific information is coming from that’s being used in an underwriting decision, and how to correct erroneous information or appeal a decision based on this information. This is where your brokerage general agent comes in. They can help decipher the data that’s been collected, help your client obtain a copy of these reports, and then determine a plan of action to overcome any roadblocks that might be causing problems. For better or for worse, big data is here to stay. And the better we understand it, the more we can leverage that knowledge to get our clients the best underwriting offers possible.

In my experience, two of the most challenging underwriting topics for advisors to understand are liver disease and kidney disease. The two have nothing to do with each other so I believe the reasons are a lack of understanding of the functions of these organs and the lab-test alphabet soup that accompanies adverse underwriting decisions based on impairments of these organs. In the following article, I’ll describe the functions of the liver and kidneys; I’ll describe how diseases and disorders affect each organ; and I’ll explain how to interpret the lab results that to the lay person appear to be just random letters on a page.

The Liver
The liver is located in the right upper quadrant of the abdomen and is the largest solid organ in the human body…approximately the size of a football. This is of course dependent on body size and sex. The average weight of the liver is three pounds. The liver is one of the most diverse organs in terms of its numerous functions, the most important of which include the production of bile which helps to break down fats in the small intestine during digestion, the production of certain proteins for blood plasma, and the production of cholesterol and special proteins to help carry fats through the body. This is only a sample of what the liver does with some experts believing there may be as many as 500 functions that it performs. Because the liver is so multi-functional, screening for past, current, and potentially future liver disease is a critical part of analyzing a life insurance risk.

Liver Diseases
One of the most well known and most common liver diseases is Hepatitis (‘hepato’ is the Greek word for liver and ‘itis’ is the Greek word for disease, especially an inflammatory disease). Therefore hepat-itis literally means inflammation of the liver which is exactly what Hepatitis is. There are five primary types of Hepatitis: A, B, C, D, and E. The two types that insurance companies care about most are Hepatitis B which has no cure and Hepatitis C which can indeed now be cured. Many insurance companies test for Hepatitis B and C on every client, but some only test at certain ages and death benefits.

Insurance companies determine the ratings for individuals who have a history of Hepatitis B and C based on several factors, most of which are blood tests. The first tool underwriters use is the liver enzyme panel.

Liver Enzymes
Liver Enzymes (also called Liver Function Tests or LFT’s) are one of the most confusing subjects for many advisors to understand and to explain to their clients. The reason is that a) many times there is no way to determine the cause of the elevations, and, b) LFTs are only screening tests and not diagnostic tests which is also difficult to explain to clients. Sometimes insurance companies don’t actually know why mortality is affected by a particular lab elevation and no definitive cause is determined, but mortality studies do show that life expectancy is affected by these elevations.

The four liver enzyme tests that life insurance companies look at are the GGT (Gamma Glutamyl Transpeptidase), the AST (Aspartate Aminotransferase), the ALT (Alanine Aminotransferase), and the ALP (Alkaline Phosphatase).

The term ‘Liver Function Test’ is technically inaccurate even though it is used almost universally. What these tests actually show are potential damage to the liver…when these enzyme assays are found in higher concentrations in the blood, it can be a sign of damage to liver cells called hepatocytes. However, this isn’t the entire story. Because these enzymes are also found in other organs throughout the body (skeletal and cardiac muscle, bone and intestine), elevations can also be a sign of other disease processes. Below are a few examples:

• AST elevation without alteration of ALT suggests the cause of the elevation is not related to the liver.
• AST elevations in excess of ALT elevations are suggestive of alcohol abuse.
• ALP elevation without a change in GGT suggests a bone origin.
• Elevation of GGT with elevations of ALT and/or AST, where GGT is the predominant elevation can be a sign of another liver condition called Cholestasis.
• GGT elevation with an increased MCV and/or HDL cholesterol suggests alcohol abuse.

As the above bullet points suggest, liver enzyme tests are not diagnostic…they are only screening tests. So additional testing by the proposed insured’s personal physician would have to be performed to actually make a diagnosis. However, subject to how elevated the liver enzymes are, and assuming there’s no history of Hepatitis or other liver disorders in the proposed insured’s past, an actual diagnosis isn’t always or even usually necessary to obtain an offer of life insurance.

The next step the underwriter takes when a proposed insured has a known history of Hepatitis B or C, assuming the liver enzymes are normal, is to request additional tests to be run on the existing blood sample. Details of these additional lab tests are beyond the scope of this article, but these test results can also usually be found in the insured’s medical records which will always be requested by the underwriter. Finally, if a liver biopsy has been performed, it will also have to be obtained and reviewed by the underwriter or one of the medical directors at the insurance company. Once the underwriter has all of this information they can determine how much damage has been done to the liver, how much viral load is currently in the blood, if the insured should be approved or declined and, if approved, at what rate class.

Hepatitis Treatment
I won’t get into the types of treatment or rates of success, but many people can indeed now be cured of Hepatitis C. A very important point to remember is that many people who have had successful treatment have had the disease for several years, many times without knowing it. Therefore, even after being cured and the virus is no longer detectable in the bloodstream, there are many instances where the virus did substantial damage to the liver prior to treatment so an offer of life insurance either still isn’t possible or the rating will be extremely high. But for those individuals who had mild disease, little damage to the liver, and successful treatment, excellent offers are usually possible.

The Kidneys
The other medical condition that’s more confusing than it really should be, especially with regards to the lab results, is kidney disease.

The kidneys lay behind the liver on either side of the spinal column. The average size of each kidney is approximately the size of a large fist and it is estimated that the kidneys can hold up to 22 percent of the body’s blood volume at a time. The primary function of the kidneys is to remove waste from the blood, but they also regulate the ph of bodily fluids, regulate blood pressure, and help ensure homeostasis in the body among other things.

The kidneys are basically a very intricate and complex filtration system. When blood enters the kidneys (technically when it enters the inner part of the kidney called the nephron), waste and other material are separated from the blood. The material that the body needs is then re-absorbed into the bloodstream and the waste material is expelled through the ureters and into the bladder. And the newly filtered blood returns to the rest of the body through the renal veins.

Kidney Diseases
I won’t go into the several types of kidney disease in this article but will just use the generic term “kidney disease” when referring to the breakdown of the filtration process noted above. Initial screening tests for kidney disease are done in two ways—blood tests and urine tests. Blood tests determine if waste isn’t being filtered from the blood efficiently. This is done by measuring the amount of this waste left in the bloodstream. Urine tests determine if substances that should be re-absorbed after being filtered out aren’t being re-absorbed as they should be. This is done by measuring the amount of these substances in the urine.

The most common test to diagnose kidney disease is a blood test, or more accurately three blood tests…the Serum Creatinine, the BUN (Blood Urea Nitrogen), and the GFR (Glomerular filtration rate). These three tests are run on every blood panel done for life insurance and these three tests are run virtually every time an MD checks a patient’s blood. I’m going to focus on the Serum Creatinine and GFR, as the BUN plays a smaller role in life insurance underwriting.

Serum Creatinine is a waste product derived from the breakdown of muscle tissue. If, as is stated above, an individual has kidney disease, the kidneys don’t filter out the Serum Creatinine as they should, and it builds up in the bloodstream. By testing the level of Creatinine on the insured’s blood panel, the insurance company can detect possible kidney disease.

The Glomerular Filtration Rate or GFR is a derivative of the Serum Creatinine test that takes into account the proposed insured’s age, race and gender as these factors can determine what a normal Creatinine level is for each individual. It is easiest to think of the GFR as a percentage of kidney function. A GFR result of 100 can be thought of as 100 percent kidney function/efficiency. Therefore, the Creatinine and GFR have an inverse relationship. The higher the Creatinine level (the amount of waste left in the blood), the lower the GFR (an expression of how well the kidneys are functioning).

The other screening tool that underwriters use in determining kidney function are urine results, specifically testing for glucose and protein in the urine. When blood enters the kidney, several substances are filtrated out of the blood. The good substances that the body needs to survive like glucose and protein are re-absorbed into the bloodstream and travel back to the other organs that need them to function properly. But when an individual has kidney disease, this re-absorption is hampered, and glucose and protein are expelled with waste material through the urine. By testing for glucose and protein in the urine, underwriters can detect possible kidney disease.

Stages of Kidney Disease
One of the most confusing aspects of underwriting kidney disease is the classification system of chronic kidney disease or CKD. Below is the classification system used by most physicians.

• GFR >90: Stage 1 CKD
• GFR 60-89: Stage 2 CKD
• GFR 30-59: Stage 3 CKD
• GFR 15-29: Stage 4 CKD
• GFR <15: Stage 5 CKD

As you can see, the GFR test is the basic unit of measurement when determining the stage of kidney disease. But medical records will often reflect a stage that isn’t backed-up by the lab results in the medical records or on the insurance exam. The stage noted in the medical records is many times noted to be worse than what the lab results actually reflect, so if you have a client who is rated or declined based solely on what the medical records indicate the stage of kidney disease is, always verify with the underwriter if the lab results do indeed reflect this. Many times they don’t and this may save a case from being rated or declined inappropriately.

Kidney Disease Treatment
There unfortunately isn’t any true treatment for kidney disease in most cases. Treating the contributing factors such as blood pressure, obesity, and diabetes can help stabilize the condition, but this is really all that can be done. Note that stability is the key to getting the best underwriting offer possible. For example, someone with a GFR in the 50s (Stage 3 CKD) that has been stable for several years will many times get a better underwriting offer than someone with a current GFR in the 60s (Stage 2 CKD) but whose GFR has been dropping by five points every year for the last five years.

Conclusion
How liver disease and kidney disease are underwritten seem to be two of the more difficult topics for advisors and their clients to understand. But when you understand the lab results and what they mean and how to interpret them, it becomes easier to work with the underwriter for a potentially better rate class or at worst to help explain to your client why the offer that’s being made is what it is. Being the well-rounded expert in the eyes of your client will only help solidify the relationship you’ve worked so hard to create.