Picture Brightening For Clients With History Of Depression
Securing insurance for clients with depression used to be the producers “worst nightmare.” The coverage, if issued, was often rated or restrictedno matter what.
People in the field and home office are reporting that, where depression is concerned, the underwriting picture is brightening.
Clients with this history are no longer automatically declined. Theyre not automatically accepted, either, of course–but cases do get offers. Some have table ratings but others are issued standard or even better.
When the clients condition is severe and/or unstable, it is still difficult to find any carrier that will accept the applicant, sources say.
And, if the producer handling the case is relatively new to the business or lacks experience with such clients, “placing the case can be pretty tough,” says Robert Littell, principal of Littel Consulting Services, Atlanta.
However, prospects for a favorable outcome greatly improve if the clients condition is mild to moderate, if the client has been stabilized for some time, and if the producer makes a good case for this in the app, Littell says.
For example, producers should provide the underwriter with accurate supportive information, Littell says. “Point out other factors and corroborating circumstances. Enlist the help of a good broker. Ask your client to ask the treating physician to write a letter that provides other corroboration.”
Doing that takes time and effort, sources agree. But in view of todays more measured approach to depression, it may be worth all the work for most lines of insurance.
In life insurance, for instance, the industry is moving toward accepting some cases that would have been declined 25 or more years ago, says Marty Fleischer, vice president and chief underwriter for Travelers Insurance, Hartford, Conn.
Further, “some insurers are taking as standard people who previously would have been rated.” Some with a prior history of depression may even be rated preferred, he adds.
In long term care insurance, a history of depression “may have more impact” on acceptance and ratings than in life insurance, because LTC insurers look for morbiditynot mortalityexposure, say sources. But the particulars of the case and the quality of information provided about it have a lot to do with the underwriting outcome, says Eric Marcus, president of the Marcus Agency, Sudbury, Mass.
“LTC underwriters want to know whether the illness is situational or long term, whether its under control and for how long, whether treatment has ended or is ongoing, and so on,” he says.
An applicant whose condition is controlled by ongoing treatment might be rated as standard, if other factors are favorable, Marcus notes. Furthermore, someone in good health who recovered from a situational (event-related) depression some years back may even be rated preferred for LTC, he adds.
In disability income insurance, the prospects are dimmer but not totally impossible, points out William Driscoll, president of Driscoll Financial, a financial planning firm in Plymouth, Mass.
Depression-related DI claims may not last a long time, he notes. However, they tend to be more frequent than for other types of illnesses. That deters insurers from taking such cases, especially if the condition is of long duration, he says. They wont even rider out the depression exposure, he says.
Sometimes, if the applicants condition is mild but recent, certain DI insurers may offer some coverage, Driscoll says. However, the company may limit this by phasing in the full benefit over a three-year period.
Still, theres the hope for some DI buyers. If the person has been free of treatment for depression for five or more years, Driscoll says some DI insurers may offer coverage with no restrictions.
Even applicants for critical illness insurance may benefit from the new thinking. “If the CI applicant is stable and has had the condition for a while, it may not be a big problem,” reports Michael Wilkins, M.D, vice president and medical director for life, LTC, DI, CI and major medical insurance at Mutual of Omaha in Nebraska. “In some situations, there might be a little rating in the first few years which could then fall off, if the insured is doing well.”
Whats behind the more open approach to assessing applicants with depression? There are a host of factors:
Medical knowledge about depression has increased greatly in recent years.
Physicians now know more about depression, says Wilkins. “Were learning that it may be a disorder in the brain chemicals.” This has led physicians to treat it more as a medical disorder, and to use new medications for treatment that “are more effective than those of the past, have fewer side effects, and show greater success long term.”
Thinking has changed about risks associated with people using medicines for depression on a long-term basis.
In some instances, long-term use is viewed as the appropriate treatment, “particularly if the person is stable and doing well,” says Wilkins.
Underwriters can better pinpoint underwriting risks, due to the increased knowledge about depression.
For instance, says Wilkins, if a woman has mild depression but no substance abuse, underwriters know shell have brighter long-term prospects than if she had depression and substance abuse combined.
The information flow from the field has improved.
As Fleischer puts it, producers “are doing a better job of field underwriting.” They are more knowledgeable about types of information underwriters want, and about underwriters need for accurate information, he says.
The field is better educated about depression.
“I think the insurance companies are doing a better job of educating the field underwriter about our information needs,” says Fleischer. Furthermore, “the professional associations are promoting that understanding; and various other organizations and media are presenting information about impairments and need for accurate information.”
Pharmaceutical databases are assisting the underwriters.
Such databases show which medications a person has taken. Underwriters now use this information to “backward underwrite” and/or to corroborate records already submitted, says Littel.
People who have depression face less social stigma than in years past.
The incidence is so common today that “people almost think something is wrong if youre not on an antidepressant,” quips Marcus. Thats not surprising, he adds more seriously, “because some people are actually in a better situation for having had treatment than not.”
This more accepting attitude means more clients are willing to tell agents about their condition than previously. “Im seeing this with people in their 70s as well as younger adults,” reports Driscoll.
Older folks are reluctant to say “depression,” he allows. Theyll say theyre “nervous” or “need to talk things out” or “have issues.”
Still, he takes the trend as a sign that the code of silence is breaking. Thats good, he says, “because it helps me provide more accurate information to the underwriterand to do a better job for my client.” (Its even better if they spell out what the “issues” are, he laughs.)
Medical and societal trends notwithstanding, producers still do need to do some footwork to place cases involving depression.
Fleischer calls it providing “full disclosure”i.e., supply the underwriter with background information on the client, the condition, the contact information for the treating specialist, etc.
Thats “the agents Number One tool,” he says.
Unfortunately, says Marcus, some agents dont do this, not even in todays more receptive environment.
“If the client has told the agent about an episode of depressionand some dontsome producers dont know what to ask about the condition” (see chart for suggestions). Others may not want to take the time to ask questions unless underwriting indicates its necessary. Still others may worry about being too intrusive or prying.”
Unfortunately, failing to get that information upfront leads to problems, Marcus says. “You get more not-takens; you need to re-sell more cases; and you risk client dissatisfaction.”
“When we know everything up front, we can quote more realistically. That reduces the not-takens, and the need to re-sell. Its also a lot easier to make the sale when you give the client the real probability on rates.”
So, get the information you can, especially factual information and names of people to contact for accurate and dependable information, suggests Fleischer. “Also, learn the basics of the impairment and the basics of underwriting. Contact your companies for materials on this–get them and read them.”
Privacy issues do present challenges to those seeking complete histories, Littell cautions.
“New minimum disclosure requirements, in the Health Insurance Portability and Accountability Act of 1996, require doctors to disclose only the minimum protected information necessary to someone other than another doctor,” he notes. That means insurers may not be getting the full medical files, and doctors may worry about opening themselves up to litigation if they do provide it, he says.
Many medical institutions already insist on using their own release forms, not those supplied by insurers, he says. And some are responding to insurer requests for information by sending only “summary letters,” not blood chemistry and other “raw data.”
This is all the more reason for the agent “to be an advocate for the client” and to seek the clients help in getting the information, Littell says.
Financial planning is no different for a client with a history of depression than for anyone else, maintains Driscoll. “The depression is just a piece that makes it a little tougher, and sometimes impossible, to get coverage.”
If theyve gathered a lot of information, agents should “feel confident” submitting such cases, Fleischer contends, “because you may have a more favorable outcome than was possible many years ago.”
Marcus feels especially pleased when that happens. “When I find a company that treats the client well and recognizes that my client has gotten his life together, I feel a lot of personal satisfaction. I feel like a hero.”
Reproduced from National Underwriter Life & Health/Financial Services Edition, November 12, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.