Monday, June 14, 2010

Finding life insurance if you have medical problems Cover Art

Finding life insurance if you have medical problems

Summary: An impaired-risk specialist may be able to help you find affordable life insurance despite health problems in your medical history that could raise red flags in the application process.

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Finding low cost life insurance isn't always an easy task. If there's a health problem in your medical history that raises red flags in the application process, you may want to enlist the help of an impaired-risk specialist.

Impaired-risk specialists are insurance brokers who know which life insurance companies tend to offer the most competitively priced policies for applicants with certain medical conditions or risky lifestyles. For example, some insurers will offer better prices for people with heart disease or diabetes than other companies. Other life insurers are more lenient when it comes to cigar use or tobacco chewing. And still other companies will quote better rates for nonmedical risks such as aviation, scuba diving or foreign travel.

'Best available' quotes

Impaired-risk specialists know which life insurers are likely to offer the best-available life insurance quotes for these situations. They can informally shop around your application with different insurance companies before submitting a formal application. (For more about underwriting categories and rates, here's how insurance companies view you.)

Unless you’re looking for a lot of insurance with a face value in the millions of dollars, it probably doesn't make sense to hire an impaired-risk specialist on your own. Some large insurance agencies have an advocate or an agent experienced on staff for higher-risk applicants. Alternately, your local agent can contact a brokerage that specializes in placing impaired-risk applications with insurance companies that will have the best pricing for the medical condition at issue.

For example, Modell Brokerage Group, based in Wayne, Penn., works with agents across the country who have clients with medical conditions. They know which insurance companies are likely to be the most lenient in underwriting a case and seek multiple competing quotes from those insurers. "We get life insurance for people regardless of age, regardless of health, and we get them the least expensive insurance," says Steven Modell, president of Modell Brokerage Group who has 20 years of experience in underwriting. “In the small market case (under $100,000, we can deal with any impairment. In the large market case (over $100,000), it’s a different story. We can’t always get cases done. But 99 percent of people with medical problems can get some life insurance.”

Life insurers rarely give preferred or super preferred rates to applicants with medical problems, Modell says. Clients with major health problems who receive preferred or super preferred rates should be cautious – the agent won’t be able to deliver that rate in the end.

However, the overall cost of life insurance is decreasing, as people are living longer. “The price of insurance has slowly gotten less expensive and is continuing to move in that direction,” Modell adds.

How to find specialists

If your insurance agency has an in-house specialist who deals with impaired risks, you should find out what makes him qualified to handle your case. Ask if the agency's specialist is a former insurance company underwriter. Former underwriters are often well connected with current underwriters and have direct experience setting policy prices for those with medical conditions. Former underwriters will know the positive indicators insurers look for when trying to make the best offer. This experience will allow the specialist to put your case in the best light when he contacts an insurer.

Former managers at insurance companies, who have overseen underwriters, can also make good impaired-risk specialists. They are especially valuable if they have supervised the processing of impaired-risk applications and are familiar with the risks involved in insuring people with medical conditions. This kind of experience can be difficult to quantify, but the very best will be members of the Risk Appraisal Forum.

Risk Appraisal Forum members, together with underwriters for insurers and life insurance medical directors, discuss new procedures and techniques with medical authorities. Forum members are familiar with how medical advances can improve your insurability; they indirectly help impaired-risk applicants across the country by keeping underwriters and medical directors informed about advancements in longevity and mortality for medical conditions.

If your agency doesn't have a full-time impaired-risk specialist or a consultant, look for an agent who has experience finding life insurance for people with medical conditions. Agents who have more than 10 years of experience, or who write 15 to 20 percent of their policies for people with health problems, can be just as knowledgeable and well connected as former underwriters. However, it’s best if your agent works with at least a dozen life insurance companies so they can truly get you the best coverage at the best rate, Modell says.

You might consider finding an agent with the Chartered Life Underwriter (CLU) or the Life Underwriter Training Council Fellow (LUTCF) designation. CLU and LUTCF agents have shown a commitment to learning about the business of life insurance. These agents usually have many years of experience and have most likely taken courses on how to provide coverage to people with health problems. You may also consider looking for a broker with similar experience. Ask friends for a referral or obtain some names from the National Association of Insurance and Financial Advisors (NAIFA).

Also, your agent or broker should obtain a copy of your medical records to review and fully understand your medical condition(s), Modell suggests. Or you can provide a copy to them. If they don’t mention your medical records, they might be planning to treat your application the same as every other, hoping for a favorable result.

You’ll also need to obtain and sign a Health Insurance Portability and Accountability Act (HIPAA) release form, which your agent should provide, which allows them to share your medical information with the insurers listed on the form in order to find you the best coverage, Modell says. Finally, be honest about your health. If you lie, it can result in your application being declined.

Impaired-risk specialists' 'specialities'

Impaired-risk specialists most commonly work with people who have been diagnosed with or have a history of the following:
  • Alcohol or drug abuse
  • Cancer
  • Depression
  • Diabetes
  • Hazardous occupations or hobbies
  • Heart disease
  • Hepatitis C
  • Hypertension
  • Obesity
  • Stroke
  • Tobacco use

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