What To Do When An LTC Insurance Applicant Might Be Rated Up

By Marcella De Simone

No one likes it when a client gets rated up for long term care insurance, particularly when her condition does not make her a decided candidate for poor future health. But there are ways to handle such situations, say producers.

Getting as much information from the client as possible before filing the application is how William Thrash staves off the possibility that the client will be rated up undeservedly. Thrash is a registered representative in the Anniston, Ala., office of Axa Advisors, which is headquartered in New York.

Obtaining a comprehensive medical history is also something that Janet Reardon, an insurance specialist in Woburn, Mass., makes sure to do before approaching a carrier. “It enables me immediately to rule in or rule out specific carriers,” she says.

“I chose to go the independent route because I have yet to find two carriers whose products are identical and their underwriting varies significantly,” Reardon adds. Her strategy is to determine which companies would be most willing to underwrite the client before submitting the application.

Marybeth Prescott, a long term care insurance specialist at Prescott Brokerage Services, Centerville, Mass., approaches the situation the same way. “We have certain companies that we go to who write more impaired risk,” she says. “The rates are higher. If they really want the insurance, and based on their health, theyll pay it.”

Thrash always asks clients to get a copy of their medical records. When the client has a family history or condition that can be perceived as something that can affect the applicant in the future, even though unlikely, he asks the client to get a note from the doctor testifying to the clients physical condition in addition to the record.

Sometimes, company underwriters may misinterpret what is in the medical record, he says.

Case in point: A running partner of Thrashs, whom he prospected as a life insurance client precisely because Thrash knew was in top physical shape, was rated up. This news came much to the surprise of both Thrash and his friend.

It turned out that the prospects doctor treated his father, as well. And, because the doctor treated the elder for hypertension, the doctor assumed the son could be at risk as well. So, despite being in peak health, Thrashs friend was rated up.

But, when all agree there is a legitimate reason to rate up a client, Renee Renda says she tries to “find them the best policy they can get, if its reasonably priced and its with a carrier that is strong.” Renda is vice president, Dobbie Insurance Agency, Wellesley, Mass.

Alternatives Renda uses when a client is declined by LTC insurance carriers include life products. Sometimes these policies will “replenish the funds if a LTC situation arises,” she says. “And, there are some life products that have LTC benefits built in.”

Other than that, putting the client in contact with a lawyer who does other types of planning can be an option for such a client, Renda says.

Reardon looks to a shorter daily or monthly maximum benefit or a longer elimination period when a client who is rated up has a hard time paying for the policy.

“Even with these adjustments, if its still not affordable, I refer them to an elder law attorney who can tell them the next best bet,” she says. “I do not sell long term care insurance to people who cant afford it.”

Thrash says that when a client is “fine and they get rated up, I try to get it corrected, because the other problem you have is, they get put in the MIB (Westwood, Mass.-based Medical Information Bureau) with the rating. What we usually do, if we feel like its totally wrong is, we ask the doctor to write a letter clarifying.”

One of Thrashs clients took a blood test but had forgotten to fast before taking it. When the results showed urine “loaded with protein,” the carrier was prepared to decline the application, Thrash says. It turned out the client had eaten his usual cottage cheese breakfast. In a case like this, Thrash asks the doctor to write a letter clarifying the results.

“I go to long extremes before I put a case in. I spend a lot of time filling out applications and I dont want to waste my time or the companys time,” Thrash says. “If you do it right before you go, what you get back from the underwriter is going to be straight.”


Reproduced from National Underwriter Life & Health/Financial Services Edition, October 31, 2003. Copyright 2003 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.