Much of underwriting over the years has been a debit assessment program. A case starts at standard or preferred, and then debits for medical impairments or habits that adversely affect overall health are applied.
While it has proved an effective system in calculating and pricing for overall mortality, it hasn’t worked the other way—crediting those who show evidence of a healthy lifestyle or who take better care of themselves than most. These situations can help overcome the effect of some impairments and minimize the risk of others when positive factors are considered. This is the new system of underwriting credits.
The concept of crediting makes a lot of sense when estimating life expectancy. You would expect better outcomes in people who have disease who don’t drink or smoke, for instance. Likewise, those who visit doctors and specialists regularly to stay on top of things and have their treatment adjusted accordingly would have better outcomes.
There are best case scenarios to every health situation, and applying credits in those situations makes underwriting offers not only more fair but also more competitive when assessing and pricing a risk.
Smoking is a known hazard to overall good health. The many effects nicotine and smoking have on the body—from coronary artery disease to emphysema, vascular disease to cancer—have all been well-studied and documented. Stopping smoking is an overall benefit to health. Never having smoked at all is even more beneficial. Credits can be applied in a situation like this for lifelong non-smokers.
Family history is one of the best predictors of long life. You really can’t pick your genetics, but those born into families with a history of long life have a built-in advantage. You can obviously override this advantage with poor lifestyle habits, but whether it is an increased immunity to disease or a lack of genes known to accelerate disease, there is no denying the benefit of a history of family longevity. Parents living into their eighties or who are alive and well in their seventies are a good opportunity to credit an insured.
Wellness and lifestyle credits are also given when an insured has regular medical care and follow-up, including regular routine physicals and blood testing. The use of cardio-protective medication such as aspirin and cholesterol lowering drugs (statins) also has positive outcomes. And of course, a favorable lipid profile on no medication is likewise a plus.
Wellness credits can also be given when more advanced or sophisticated testing goes beyond the norm in showing good health. For example, those who have negative stress tests and/or a negative echocardiogram show positive cardiac status above what is unknown in most applicants. Further testing, such as a negative EBCT test (electron beam computerized tomography) or negative CT angiogram, may demonstrate a lack of calcification in coronary arteries and a more favorable prognosis, and can also be credited as positive factors.
Underwriting often starts at a known stage of disease or health and then works backward, depending on what other conditions may adversely affect mortality. However, there are cases where even with a known impairment, positive factors that lead to a better than expected outcome may work in the client’s favor. In these cases, credits can actually be issued to improve the case and make it a better outcome for both insurer and client.