“My doctor never mentioned that she was concerned about my health so why did my life insurance company charge me more for my policy?”
The answer is that life insurance companies and medical doctors evaluate medical conditions from different perspectives. Therefore, it is quite common for an insurance company to charge an increased rate for life insurance based on your medical history when your personal physician has never suggested the presence of a potential impairment. In fact, your doctor may have even told you that you “are doing well” or that he is “happy with your current health”. Sound confusing? You are right.
What is Life Insurance Underwriting?
Life insurance underwriting is the process by which insurance companies review an individual’s health history, avocations and lifestyle factors to determine their actual risk of mortality. The goal of life insurance underwriting is to accurately assess an individual’s risk level for the purposes of assigning the correct rate for life insurance. Every life insurance company has its own unique set of underwriting guidelines for categorizing an individual’s health class. Therefore, it is common for one insurance company to offer a lower rate than another depending on how your health history matches their respective health guidelines. Likewise, life insurance underwriting and practical medicine do not come to the same conclusions regarding an individual’s overall health. Why?
Life Insurance Underwriting Versus Your Physician’s Evaluation
The reason why life insurance companies and doctors have competing views on medical impairments is that each evaluates your health based on different objectives. Life insurance companies look at an individual’s overall life expectancy while doctors normally treat medical conditions by managing symptoms. Furthermore, life insurance underwriting involves making future decisions about an individual’s risk level based a current “snapshot” of your health while medical doctors have the luxury of continuous evaluation and treatment based on ongoing health changes. Life Insurance companies have only one chance to get it right and will therefore be much more conservative when assessing your risk level. Finally, while a specific impairment may pose no immediate threat in your doctor’s opinion, life insurance companies consider every kind of health condition as being a potential increased risk.
A Real Life Example: Borderline Diabetic or Just a High Sugar Reading?
Let’s consider the hypothetical example of Mr. Jones, a 60 year old business owner that has had slightly elevated blood sugar levels (glucose) at his last two visits to his doctor but has otherwise been in excellent health. How will a life insurance company view the recent blood sugar elevations? What will his attending physician say about the higher than normal readings?
His attending physician will likely review the degree of Mr. Jones’ sugar elevations and either suggests that he change his diet while warning him of the potential for type-2 diabetes or simply document his medical file to watch for blood sugar results on his next lab test. He may or may not mention to Mr. Jones the long term potential for diabetes. He will likely schedule another fasting lab test in 2-3 months and have Mr. Jones come in to evaluate the results. If the elevations are significant, the physician may diagnose type-2 diabetes and begin to consult with Mr. Jones about ongoing treatment and control. If the elevations are mild, he may continue to monitor the blood results without disclosing to Mr. Jones the readings as a significant health risk.
On the other hand, all life insurance companies will scrutinize the elevated glucose readings very closely. As part of the life insurance application process, all insurance companies will require a complete blood profile to include a glucose test as well as an A1C reading, which is a more defined test for the potential for diabetes. The insurance company will also review Mr. Jones’ medical records from his attending physician including all notes and the actual lab tests completed at his office. Depending on the results from the life insurance exam and review of Mr. Jones’ medical file, the insurance company may charge a rate commensurate with borderline diabetes. In other words, the insurance company may assume borderline diabetes even though Mr. Jones’ doctor has not told him that he was a borderline diabetic.
Mr. Jones applies for life insurance and is unexpectedly rated or postponed based on his lab profile done for the insurance exam combined with the medical information in his doctor’s report. The insurance company’s decision is a shock to Mr. Jones, but a reality when it comes to life insurance underwriting.
Good News from MEG Financial
If you have applied for life insurance and been charged more unexpectedly, MEG Financial can likely help! One derogatory underwriting decision does not mean that better rates are not available with a competing life insurance company. The key is having an experienced independent insurance agent as your advocate. At MEG, “we leave no stone unturned” in making sure that we identify the insurance company that will offer each customer the best rate based on their specific health circumstances. Call MEG Financial today at (877) 583-3955 or submit this short form and we will shop the marketplace to make sure that you have the most competitively priced life insurance policy.