It wasn’t that long ago that underwriting life insurance consisted of setting the application, exam and medical records next to a big underwriting guide (just my picture), matching up all of the maladies with a long ago predetermined mortality assumption and declining the application or approving it at whatever rate the guide suggested. Of course I realize that most underwriters probably use that guide on a computer now, but I still like my notion of an old guy with reading glasses, a file and a five inch thick book called the XYZ Life Insurance Company Underwriting Guidelines, 74th edition.
I’ve said it for years and thank the Lord I’ve lived long enough to see life insurance underwriting coming around the corner and finally glimpsing the 21st century where those old assumptions don’t fit anymore with reality. This is the decade of predictive analytics or predictive methodology, a new day for underwriting that is a step beyond and away from the crusty old mortality models that have been used just a bit too long. The time has come for life insurance companies to quit heaping assumptions on people who are more than likely going to outlive the “normal” life span.
I’ve heaped praise on those life insurance companies that acknowledge and take to heart medical advances that have turned the killers of my childhood into manageable conditions. 50 years ago the only way they knew to fight cancer was to poison the patient in hopes that enough good stuff would live while all the bad stuff died. It was far from an exact science and back then there were no screening methods so you found out you had cancer in the same office visit where you were generally told how long you might expect to live.
Today education and aggressive screening has cut cancer deaths dramatically by leading to early detection and the chance to treat low stage and low grade cancer successfully. We’ve talked about life insurance life insurancecompanies that will underwrite watchful waiting in prostate cancer, several types of cancer immediately after treatment and now a company that will underwrite low stage and grade prostate cancer within a year of the diagnostic biopsy, even if you haven’t or aren’t going to choose a treatment. That’s analytical underwriting.
It is this kind of analytical underwriting that US Financial Life, had they survived their brutal buyout, would be doing today still under their banner of clinical underwriting, focusing on the person and their individual situation, rather than stale statistics. It is this kind of forward thinking that will lead to our ability to underwrite traditional life insurance for well controlled HIV positive clients and so many other medical issues that have been held at arm’s length for far too long. It is this kind of forward thinking that will finally break the mold and allow underwriting of children at rates other than standard in both directions.
Bottom line. I think Darwin had it all wrong on evolution, but that doesn’t mean logical evolution doesn’t exist. Cars have seat belts now. That’s logical. Information can be stored on computers instead of in books. That’s logical. People who have a disease detected early and get the right treatment often outlive their contemporaries with no disease. That’s logical too. If you have any questions or feel you’ve been treated unfairly in a life insurance experience, call or email me directly. My name is Ed Hinerman. Let’s talk.