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.