The life insurance industry has managed to hold off progress in mood disorder risk underwriting for way past a time period that would indicate that they were just being cautious, but in many ways their understanding or lack of it is nothing more than a mirror of society. In the 21st century it’s clear that some of the stigma that comes with being a touch mentally out of balance is gone. But not all.
Let’s put a floor under this from a life insurance mortality risk standpoint. We worked with an attorney a few years back who had done his eight years of school while married, working and raising children. When it came down to finals and the bar exam he would soon be taking, he was stressed. After discussing it with his wife he saw a doctor and was prescribed an anti-anxiety medication that was very effective. It helped ease the anxiety of coming up to what is really the pinnacle of everything he had been working for the last eight years. Given that description of the situation most people would say he did the prudent thing.
Six months later he was a full fledged attorney. The pressure was off and he was able to just focus on his new job and his family and he, with his doctor’s blessing, left the medication behind. A few years later, with everything going great and his income growing he decided to increase the amount of life insurance he had. He had bought a $250,000 policy when he got married, but now he was making $200,000 a year and had 3 children and wanted at least $1 million if not more. When he got the first $250,000 policy it had been a breeze applying and being approved for the best rate class. He didn’t have any health issues, nothing that would bump him out of the best class. So he applied for $1 million and was shocked 4weeks later when it was approved, but at a standard rate. The company said it was because of his treatment for anxiety. He put the policy in force because he wanted it for his family but it just didn’t seem like he was treated fairly.
He was referred to Risk Life by a physician friend who had experienced similar treatment. We shopped the information and within a week we had a new application with a company that looked at the whole situation through more sensible glasses. They didn’t see him as a person that had a problem, but as a person that proactively defused what could have been a problem and then got on with life. We got him approved at the best rate class, the same rate a person would get if they treated cholesterol or blood pressure. The difference in price made it possible for him to get $2 million.
So why was he approved at a standard rate? This attorney couldn’t imagine he would be anything but the best rate class and for good reason. Given a cutting edge underwriting life insurance company that’s exactly what he could have expected and received. So he went what is certainly advertised as the easy route and applied with an on line agency that, for compensation reasons, pushed most of their business to one company. There’s a tradeoff for the big on line agencies though and this attorney got caught in it. The tradeoff for high comp and big bonuses for high volume is that the agency agrees to underwrite by the book, the company underwriting guide. Simply put it says standard is the rate for a history of mood disorder treatment.
The difference when we shopped it was that all of the companies that we sent it to knew we were asking them to compete for the business. They also knew that management, because there wasn’t any huge contractual agreement, would allow them the latitude to underwrite using the guideline as just that, a guideline and allow common sense to be applied. There was clearly no reason to put this attorney in the same boat as someone treated for chronic depression so they made the right choice.
P.S. Unlike an average agent using a middle of the road company, this big online agency was using one of the companies that we use at Risk Life. With the agency they have carte blanche to leave common sense in the drawer where with Risk Life they don’t get an application if they aren’t willing to use common sense. If you have any questions or feel you’ve received the wrong treatment by using one of the brand name on line agencies, call or email us directly. Let’s fix it.
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