How To Cut LTC Declinations On Older Applicants
How does the declining age of long term care insurance applicants affect underwriting?
In the past, insurance agents who sold LTC were said to be in the retiree market (age 65+). Their professional lives were filled with daytime seminars and mid-day appointments in their prospects living rooms.
But today, many LTC agents are instead concentrating on the pre-retiree market (ages 50-65).
Underwriting data suggests this shift is a very smart move. The declination rate for applications is directly related to applicant age. (See chart for declination rates at one company that performs the underwriting function for more than a dozen insurers.)
A number of factors can account for declinations. In some cases, the agent does not understand the underwriting guidelines of the company, and submits obviously declinable risks. However, in reflecting on the chart, Ive concluded that agents who work with 70- to 80-year-olds are not less knowledgeable about underwriting guidelines than agents working with 50- to 60-year-olds! There must be something else going on.
My best information reveals a number of reasons for the correlation of age and declination rate. Studying them–and responding to them–is likely to help agents increase their approval rates when working with older applicants. Here are the key factors:
The insurer requires face-to-face assessments. This is a leading cause of declinations, because: the applicant does have a cognitive problem; the applicant was nervous and became flustered during the exam; or the applicant simply wasnt paying attention.
Response: Successful agents ask if the applicants doctors records will mention any memory problems, or if they have ever discussed Alzheimers Disease with the doctor. Also, some agents go through a mock face-to-face assessment to prepare the applicant.
Agents do not find out the applicants real medical situation until the end of the sale. At that point, since theyve already spent several hours with the client, some agents may go ahead and submit the application, even if the medical information just discovered suggests the person may be uninsurable for LTC.
Response: Successful agents medically underwrite early in the sales process. Many go through a thorough medical questionnaire, sometimes right at the beginning, before ever even discussing policy options. This can save time and give the agent an opportunity to look into other LTC funding options if it appears the prospect is not medically qualified for LTC insurance.
Many otherwise insurable people are declined because of excess weight or smoking. Remember, in underwriting for LTC, the presence of two risk factors does not double the risk. It multiplies the risk.
For example, an otherwise insurable person with diabetes could be uninsurable if he was also overweight. A person with an insurable heart history becomes uninsurable because she smokes.
Response: Successful LTC agents routinely ask about prescription medications and hospitalization history when they are pre-screening the applicant. The smart agent adds height, weight and smoking status to the list.
A growing amount of anecdotal evidence suggests that so-called “doctors record surprises” blindside some agents. Even agents who ask all the right field underwriting questions up front can run into problems this way, when the application is denied based on new information in the attending physicians statement. Further, it upsets and confuses applicants, who often dont recall the doctor ever discussing this serious diagnosis.
The phenomenon is not limited to older age groups. But it does tend to be more prevalent as applicants age. There may be a number of reasons for this, including the doctors desire to protect the patient from bad news (especially if the situation is not treatable), and selective listening on the part of the patient.
Response: Unfortunately, short of asking the prospect to have a recent copy of the doctors records at the LTC interview, field underwriting for the “surprise” is difficult.
In sum, the agents best defense against LTC declinations is a thorough understanding of underwriting guidelines as well as the applicants health. Temper these facts with an increased awareness that, when it comes to LTC underwriting, age does matter.
is president of The Long Term Care Learning Institute, Plymouth, Mass. Her e-mail: email@example.com.
Reproduced from National Underwriter Life & Health/Financial Services Edition, January 21, 2002. Copyright 2002 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.