Throughout the years in our columns, I get both regular mail (yes, it still exists) and emails with a variety of questions. This month would be a good time to share some of these questions (and perhaps make this an occasional column) to address some pertinent things in the current. After all, questions some of you ask, often many of you have as well…
Why do different companies price the same case at different underwriting ratings? Don’t you use the same underwriting manuals anyway?
It’s a great question, and it makes business what it is—a competitive situation between companies. Since no two cases are ever the same, a variety of scenarios, impairments, and interaction on overall health of these impairments leave some subjectivity. Underwriters generally use a manual for their overall impressions (based on extensive experience from previously insured lives and their outcomes) but combining the entire evaluation based on all factors may come out a little differently in the eye of the beholder. Companies may have different experience with different impairments, or may decide they will be more aggressive in a certain area to attract business. Most cases work from the same parameters: standard and preferred cases are generally uniformly so (as are declines), and the shades of 50 shades of gray within them represent the differences. Pricing may also enter into the offer (in other words, it isn’t only underwriting or risk classification) as might the different levels of pricing (number of categories of preferred or even of impaired pricing bands); even if two companies make the same exact evaluation of mortality risk, the illustrations may be different. And by the way, there are different manuals that companies use, and variances within those sets of experienced lives may make a difference depending on the company who provides the data and underwriting suggestions.
Why do the classifications of select and standard vary so much, and how does a company decide where a client falls?
There are really two answers to this. First, when considering where an applicant will fall on the preferred to standard curve, different companies value a potpourri of favorable health factors in their considerations. These “credits” (which make a person better than the standard mortality in terms of longevity) can include objective factors such as lab results, build, blood pressure, etc., and lifestyle results (never smoked, exercise, diet, activity). Each finding counts to a varying degree amongst insurers. The second is the pricing involved for each category.
In the movie Bruce Almighty, Jim Carrey in his role as Supreme Being decides to grant everyone’s wish to win the lottery. As a result, the grand prize turns out to be $17. The more aggressively preferred is priced, the less people will qualify—but the more the savings will be for those who do. The bottom line is, ultimately, the combination of all these factors, health being the major but not the only one.
Is a cover letter absolutely necessary even when we’re shopping cases?
Three word answer: Absolutely, positively, yes. It’s your chance to make a case for what you are seeking and to make your applicant shine. There’s no way to alter objective medical facts, but there are so many cases where there are explanations—places where your client makes a real difference in his or her care and can stand out as health conscious and diligent in self care—that make a difference to an underwriter. Think of it as if your son or daughter were applying to college or a professional school. Who stands out—the person who just fills in all the blanks or the one who makes a case why they are the more qualified?
What is your company good at?
That’s one of the hardest points to address. If you state you are better in a disease or impairment than anyone else, you will be expected to perform in all cases regardless of severity, other health factors, or comorbidities, and to beat all others in a consistent mortality. There are some impairments where a company may choose to take a more aggressive approach, but not uniformly. Most companies over the years who have gambled on this (like with abnormal liver function tests for instance, or being too forgiving with blood sugars) have gambled incorrectly. Each case stands on its own merits, and again emphasizing the overall health picture goes much further than submitting all of a certain type of case to one insurer.
Where has the most progress been made over the last decade?
Overall, medical progress has influenced probably every major disease category for the positive. Some have come a very long way. Hepatitis C, once a deadly ailment, is now not only insurable in most cases but considered cured in many. Companies are beginning to consider HIV as an insurable disease. Certain cancers, such as thyroid, testicular, skin and prostate cancer, can be considered preferred cases in many instances. And lifestyle credits, with people demonstrating excellent self-care and modifying risk factors, has resulted in better offers than ever before.
