High Risk Life Insurance Approved

Approval For Life Insurance

Approval For Life Insurance

High Risk Life Insurance

High Risk Life Insurance Approved.  As children we loved surprises. What a thrill it was to get an unexpected gift or get an unanticipated visit from a special relative or friend. Usually surprises can result in positive experiences. Unfortunately in the life business we can come across many unwanted surprises.


When the agent completes an application on a client, both he and the client generally have the expectation that a policy will be issued as applied for. When applying for $500,000 of 20 year term, the 50 year old nonsmoking client was quoted the best rates, $1215 annual premium. The client was asked the routine medical questions. He answered that he had no medical problems. The only time he was ever hospitalized was to have his tonsils removed years ago. He exercises four times a week. His height and weight is normal. Both his parents are alive and well in their late 70’s. The only medication he takes is a small dose of lipitor. He says his doctor is a firm believer that the lower the cholesterol the better. Before taking lipitor his cholesterol was 210. Now it’s 165. So the application was processed. The client took his exam and everything was fine. The application was approved. But, the premium was $1425 instead of $1215. A difference of $210. So what happened? The client got preferred rates instead of select preferred because he takes lipitor. The agent didn’t realize that the company had just recently changed their guidelines for select preferred. Even though his cholesterol was well within the accepted guidelines for this class, his taking cholesterol medication moved him out of this class. The agent should have been aware of this change. Maybe he never got the timely communication of the new guidelines. Usually it is the responsibility of the general agency to let their agents know of these important changes. Nevertheless, his client was irritated. He prides himself as a person who is physically fit. He is more active than most people ten years younger. The agent was embarrassed and he did not have a rational explanation.

This unfortunate event could have been averted. Obviously the agent shouldn’t have quoted the best rates if he knew about the company’s new guidelines. That’s merely a communication problem between the agent and the carrier or the general agency.  The situation could have been ameliorated if the agent was provided with an explanation why these changes were made. Most of the companies who are involved in the marketing and sales of competitive level term products have changed their underwriting guidelines.

From the mid-80’s up to the early 2000’s many insurance carriers in the term market emphasized level term products and continuously lowered their rates. Every week there was a company claiming to have the lowest rates in the business. New rate classes such as select preferred emerged. These consumer friendly changes brought on a surge of new business.

As it turns out sometimes, too much of a good thing for the consumer was not so good for the insurers. The drive for lower and lower premiums was cutting into profitability. Then in the early 2000’s the economy drifted downward. Interest rates were getting lower. That’s good if you are buying a home. But when you are an insurance company whose portfolio is largely based on secure bonds, you are making less money on your investments. The reinsurers who backed the insurance companies were making less money due to the rate cuts. Then 9-11 created a big setback for the reinsurers due to heavy liability claims. So these factors caused the insurers to either raise rates or redefine class guidelines, or both. Perhaps if the disappointed 50 year old client was first explained why he would only get preferred rates, the agent wouldn’t suffer the embarrassment of being part of an unpleasant surprise.

                                          A Bad Case Gone Good

If you sense there may be a problem in getting a case issued, you would want to isolate that problem and get is resolved before an application is submitted. A 78 year old man needed $1 million for estate protection. He had a good health history. No heart problems, diabetes, or any other major problems were evident. Through his general agent, the agent was able to access his client’s medical records. They noticed that on a routine doctor’s visit, this man complained of dizziness and some memory loss. The doctor followed up with an MRI. This test revealed a loss of brain cells. The diagnosis was dementia. The client and the agent were in disagreement with this diagnosis. This man is quite active. He handles his own finances, drives, and shows no signs of memory loss to those around him. The general agent took the file to several companies. Most wouldn’t consider the case because they were concerned about the dementia. But they found a company with an underwriter who saw the situation as a TIA rather than dementia. A rating was given as an offer. The client understood why there was a rating. He applied and was accepted at the proposed rating. The man took the policy. Everyone was satisfied. The client was able to protect his estate. The agent helped his client while making a nice commission.

Agents need to learn how to avoid unpleasant surprises. Just writing up an application is not enough. Be aware of the latest underwriting guidelines. Try to anticipate potential underwriting roadblocks. Proper preparation can go a long way.

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Author Information:

Name:Robert (Rudy) Rudner

Title: President

Company:The Tough Case Insurance Agency, Inc.

Phone: 781-449-777


Web Site URL:www.toughcaseinsurance.com



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