Shades of grey

The term “field underwriter” takes on a new meaning when an advisor starts selling long-term care insurance. The policies are complex and require advisors to do more field research and ask applicants probing questions, regardless of whether they’re being acquired for elderly clients or younger prospects. Without strict attention to detail, a high percentage of applicants — perhaps as many as half — are likely to be declined after review by the insurance company’s underwriting department.

The first step is to apply a prescreening guide designed to weed out those who are uninsurable. These guides include a number of medical conditions that will exclude a prospect, but should be viewed as preliminary. In some cases, applicants with listed conditions may still be insurable, which means an advisor must sometimes go the extra mile to get the prospect necessary coverage. In addition to the pre-screening guides, agents need to review a company’s underwriting guidelines or call the underwriting department to obtain clarification and determine if an application should be submitted. This is quite different from the approach taken by life insurance underwriters, where direct communication is usually not allowed or encouraged.

Case in point, one client, Jack, received a kidney transplant in 1979 and was on dialysis prior to his transplant. He has one functioning kidney, which he received from a cadaver donor. For the past 27 years Jack has been on anti-rejection drugs and a low dose of Prednisone. He has no other medical problems. Jack is substandard for life insurance, and not eligible for standard long-term disability insurance or critical illness coverage. At first blush, you’d assume Jack shouldn’t even think of long-term care insurance, because both his medical history and drug regimen would exclude him. But, in fact, Jack is eligible.

Here’s how it worked. Jack’s agent had the foresight to contact the medical underwriters directly and explain the situation. Because of his stable condition, and since there are no significant side effects from the drugs, Jack can in fact apply for, and will most likely get a long-term care policy issued — albeit with somewhat limited benefits.

In order to help the underwriters assess the case, Jack’s advisor arranged for the transplant clinic to send the past three years’ worth of blood work to show all his tests have been stable, and within an acceptable range. Jack’s kidney specialist attached a letter attesting to his patient’s good general health and offered to speak to the underwriter directly to assist in the assessment. And, his personal physician sent his clinical notes from the past three years. Thanks to the persistence and thoroughness of Jack’s advisor, he was offered a long-term care contract.

Long-term care insurance isn’t black and white, there are shades of grey. A client may be offered a long-term care contract with a rating, rider or exclusion, or the underwriters may limit their exposure by scaling back the benefit type or payment period. Some applicants may be eligible for facility care but not home care. Others might be eligible for a limited benefit payment period. A review of the agents’ guidelines, and a conversation with the underwriters, may shed some light on the possible actions taken by the underwriters at the head office.

Finally, remember all long-term contracts and companies vary. For example, a reimbursement contract might be easier to get issued on a standard basis than an indemnity contract. One company may also be more experienced with certain types of claims, or might be more liberal in its underwriting. So, if you get a negative response from one company, certainly try another. You may be pleasantly surprised.

The term “field underwriter” takes on a new meaning when an advisor starts selling long-term care insurance. The policies are complex and require advisors to do more field research and ask applicants probing questions, regardless of whether they’re being acquired for elderly clients or younger prospects. Without strict attention to detail, a high percentage of applicants — perhaps as many as half — are likely to be declined after review by the insurance company’s underwriting department.

The first step is to apply a prescreening guide designed to weed out those who are uninsurable. These guides include a number of medical conditions that will exclude a prospect, but should be viewed as preliminary. In some cases, applicants with listed conditions may still be insurable, which means an advisor must sometimes go the extra mile to get the prospect necessary coverage. In addition to the pre-screening guides, agents need to review a company’s underwriting guidelines or call the underwriting department to obtain clarification and determine if an application should be submitted. This is quite different from the approach taken by life insurance underwriters, where direct communication is usually not allowed or encouraged.

Case in point, one client, Jack, received a kidney transplant in 1979 and was on dialysis prior to his transplant. He has one functioning kidney, which he received from a cadaver donor. For the past 27 years Jack has been on anti-rejection drugs and a low dose of Prednisone. He has no other medical problems. Jack is substandard for life insurance, and not eligible for standard long-term disability insurance or critical illness coverage. At first blush, you’d assume Jack shouldn’t even think of long-term care insurance, because both his medical history and drug regimen would exclude him. But, in fact, Jack is eligible.

Here’s how it worked. Jack’s agent had the foresight to contact the medical underwriters directly and explain the situation. Because of his stable condition, and since there are no significant side effects from the drugs, Jack can in fact apply for, and will most likely get a long-term care policy issued — albeit with somewhat limited benefits.

In order to help the underwriters assess the case, Jack’s advisor arranged for the transplant clinic to send the past three years’ worth of blood work to show all his tests have been stable, and within an acceptable range. Jack’s kidney specialist attached a letter attesting to his patient’s good general health and offered to speak to the underwriter directly to assist in the assessment. And, his personal physician sent his clinical notes from the past three years. Thanks to the persistence and thoroughness of Jack’s advisor, he was offered a long-term care contract.

Long-term care insurance isn’t black and white, there are shades of grey. A client may be offered a long-term care contract with a rating, rider or exclusion, or the underwriters may limit their exposure by scaling back the benefit type or payment period. Some applicants may be eligible for facility care but not home care. Others might be eligible for a limited benefit payment period. A review of the agents’ guidelines, and a conversation with the underwriters, may shed some light on the possible actions taken by the underwriters at the head office.

Finally, remember all long-term contracts and companies vary. For example, a reimbursement contract might be easier to get issued on a standard basis than an indemnity contract. One company may also be more experienced with certain types of claims, or might be more liberal in its underwriting. So, if you get a negative response from one company, certainly try another. You may be pleasantly surprised.