LTCI underwriting is not what you might think
By Julie Gelbwaks Gewirtz
Gelbwaks Executive Marketing Corp.
If you are primarily a life, disability or health insurance producer, there is a possibility that you may be unfamiliar with the process of individual long term care insurance underwriting. It is important to note that this coverage is very different in so many ways when it comes to underwriting the risk. You should expect a much more liberal reaction from carriers in reference to medications, medical conditions and treatments your client may have had. People applying for LTCI policies are generally not 18 years old and in perfect health. The average buyer in the marketplace today is approximately 58 years old, depending on the study you read. The companies expect a 58 year old to have some medical history. They could possibly even have significant medical history like cancer, heart disease and diabetes. All of which happen to be commonly insurable for long term care.
Just about every carrier offering an LTCI product has an extensive underwriting guide to assist the agent in prequalifying the risk to the best of their ability. But, when it comes to comorbids (a combination of multiple medically diagnosed conditions and medications) it is best to contact the underwriters directly via e-mail or phone to get a good sense of whether or not your prospect will be approved and at what rate class. When you do this, make sure that you have as much of the following information ready as possible. Find out the date of birth, tobacco use, height and weight, marital status, medications, medical conditions and any details regarding those as well.
Don't be surprised if your client, who has had a history of cancer, takes four medications and is an overweight smoker gets accepted for long term care insurance. And don't be afraid to approach the carrier with these kinds of prospects, either. The primary issues are control and stability. If these medical conditions are stable and under control, there is a good likelihood that you will be able to find a company to insure them. Be aware, though, that some conditions are just an automatic decline. A good example would be memory loss. Since dementia makes up a large majority of all LTCI claims, carriers tend to put forth their best effort to detect any problems at all in this area.
In addition, make sure that your client is aware of the possible long term care insurance underwriting requirements that will follow the submission of an application. Advise the applicant at time of application that one or more of the following items may be requested:
Telephone interview. The interview is typically a 20-30 minute phone conversation between your client and a nurse, consisting of standardized medical questions. The questions focus on the medical history, medications, lifestyle and daily activities. They are also asked to name their doctors and there will most likely be a memory exercise.
Medical record request. At their own expense, the company will request copies of your client's medical records from the primary physician and sometimes a specialist.
Face-to-face assessment. The assessment is a face-to-face interview between your client and a nurse in the home that in most cases will last less than an hour. The questions focus on the medical history, medications, lifestyle and daily activities. They are also asked to name their doctors and there will most likely be a memory exercise.
Medical exam. If your client has not had a physical in the past 18 months to two years, they may be asked to have a medical exam completed. This exam may include a review of your medical history, a blood pressure reading, a pulse check, height and weight readings, and a urine specimen. Sometimes this is done at the client's expense.
The best idea is for you to be prepared for the process as it unfolds. Your client should be prepared as well. Do not make the assumption that the applicant is too young or too healthy to be asked to complete the above requirements. They can and may be requested of anyone. Also, be aware of the fact that the entire underwriting process can take between six and eight weeks to complete.
This underwriting is based on morbidity, not mortality. That is why someone who was just issued super preferred for life insurance may be declined for long term care insurance. It also works the other way. Someone who was issued at the best rate class for long term care insurance may be declined for life insurance. The basis of the LTCI underwriting decision is specifically targeted to whether or not that client will have memory loss or problems with their activities of daily living at some point. Activities of daily living are generally bathing, dressing, toileting, transferring (like moving from the bed to the chair) and eating. The decision is not based on whether or not that person is likely to die early.
Team up with a general agency that can help you with prequalifying your prospects for long term care insurance, as well as prepare you for the entire underwriting process in each specific situation you may come across. Make it a productive and positive experience!
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