Declined life insurance applications. It’s where most of my customers come from. I do have a pretty fair block of business with private pilots and a growing business with Lloyds of London in high risk and high limit insurance policies such as coverage for contract workers in war zones and people that climb mountains. But at least 50%-60% of my new customers come to me because they have been declined in their first, or first several attempts at getting approved for life insurance.
I have thrown around the number that probably 99% of life insurance companies use archaic underwriting that is geared toward accepting as little risk as possible. If you have high blood pressure controlled with medication you might get approved, but if you’ve had a heart attack, have diabetes or bipolar disorder, you are pre-approved to be declined. There is no ordering of medical records. In fact most of those companies won’t even waste your time or their time and money filling out an application or doing an exam if they know that information up front.
So, with 2000 or so companies in the US licensed to sell life insurance, what I’m saying is that there are really only about 20 that are serious about underwriting and accepting impaired risk life insurance applications. It seems absurdly low but it is real. In some areas of underwriting such as type 1 diabetes, 20 companies is too high.
It would be one thing if I was talking about a heart attack survivor who is permanently bed ridden on oxygen, but 99% of the companies out there make no distinction between that person and a survivor that is the active CEO of a company, runs 3 miles a day and teaches a cardiac recovery class on the weekends. And plays recreational soccer. And is 2/3 of the way through climbing all of the 14ers in Colorado. They are both declined because the words myocardial infarction show up in their medical records. So the question really comes down to how to avoid the 1980 or so companies out there that don’t want your business?
1. Don’t just plug in to one of the big on line agencies like Selectquote or Zander or Intelliquote and let them run with it. They will put the same effort into your application as they would for a perfectly healthy 30 year old. NONE They might be appointed with some of those 20 companies, but they don’t know how to use them.
2. Don’t go to your auto and homeowners insurance agent. They may be darn good at auto and homeowners but they don’t have a clue about life insurance in general and impaired risk life insurance at all.
3. Don’t talk to an agent that represents one company. How can they possibly find you the best deal in the country if the represent 1 of the 2000 companies? By the way, none of the 20 companies I referred to work with captive agents. They all use independent agents.
4. Don’t continue a conversation with an agent that doesn’t ask questions about your impairment after you tell them about it. If you tell them you are bipolar and they simply mark a box or write it down, they’re clueless.
5. Don’t continue a conversation with an agent that doesn’t ask health questions that you know are relevant to mortality. If they essentially ask you “have you had any health problems”, they’re not doing their homework and the application is headed somewhere you don’t want to go.
6. Don’t fall for the “no exam” or “no health questions” nonsense. They are both a ploy to get perfectly healthy people scared to apply for and be approved for much better insurance. There is nothing in a life insurance exam that you don’t want to know and if there is something you don’t want them to know, it’s in your medical records and they’ll find out anyway.
7. Hang up on any agent that tries to “close the sale”. They are former car salesmen and don’t have any idea what they’re doing. You buy when you’re convinced and comfortable with the agent.
8. Walk away from an agent that says they have a quote from an underwriter but can’t produce it in writing. I get trial quotes from underwriters via email and make my recommendations based on those quotes. Any client that wants to see why I’m recommending what I am is welcome to see the paper trail that will go with their application.
9. Walk away from an agent if they don’t seem to understand that you have a budget. Life insurance is meant to solve potential financial problems if you die, not create them while you’re alive.
10. Hang up on any agent that seems to be after your entire financial portfolio. If they start asking about what interest rate you’re paying on your mortgage, life insurance is just frosting on their cake. Before they ever talked to you they had a package in mind and an insurance product picked. It’s definitely not about getting you the best life insurance for your needs and budget.
Bottom line. The right agent with the right group of companies is the only path to the best approval at the best price. If you any questions or have fallen prey to one of the ten situations above, call or email me directly. Let’s talk.