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LTC Underwriting Strategy

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Theoretical Issue:

Agents should place each client with a company that will not take anyone

in worse health, thus assuring clients the minimum ultimate cost.

The Rationale:

The client buys a policy from a carrier where most other insureds

are in at least as good health, so that, on average, the applicant

gets a “subsidy” from the other insureds, rather than provides one

to the rest of the group. For clients without health problems,

agents should seek out the most rigorous underwriter so as not

to disadvantage those clients.

Worst-Case Violation:

On a regular basis, a husband and wife both apply for coverage and

one of them is declined. The agent then recommends the couple apply

to another carrier with more liberal underwriting standards and,

if the carrier approves both applicants, the agent advises the couple

to accept both policies (thus “rewarding” the second carrier while “punishing” the first).

Better Solution:

The diligent agent should advise the unhealthy person to accept the coverage

from the more liberal company and the healthy insured to accept coverage

from the more rigorous one.

–James Glickman,

LifeCare Assurance Company, Woodland Hills, Calif.

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.

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