Time was, when a person came down with cancer in the 1960s and 1970s, they felt they couldn’t get life insurance, says Matt McAvoy, the incoming chairman of National Association of Independent Life Brokerage Agencies, McLean, Va.
But today, the message and the reality are more positive, says McAvoy, who is also president of Target Insurance Services Inc., Overland Park, Kan.
Other industry executives agree. The trend is for more acceptances than in the past, they say, due to the many advances being made in achieving earlier diagnosis and more effective treatments.
That is not to say that underwriters write all cancer cases. They don’t. People having tumors in the advanced stages and grades or certain aggressive forms of cancer will find coverage generally unavailable at any price.
But early stage and less aggressive forms of cancer are getting more favorable treatment–sometimes flat extras on standard rates, or very low table ratings.
Some people with cancer histories even can get standard rates.
Just a few weeks ago, for instance, Hartford Financial Services Group Inc., Simsbury, Conn., said it will now offer individual life insurance at standard rates to many women over 40 who have early-stage (Stage 1) breast cancer, who have strong prospects of survival and who have no major health problems.
Another insurer, MassMutual, Springfield, Mass., has updated its own breast cancer underwriting guidelines as many as three times since 2001, due to medical strides in breast cancer. As a result, the company now has as many as 14 risk categories, up from just four in 2000.
In addition, “the application of flat extras and table ratings for testicular and prostate cancers has gone down dramatically in recent years,” says Joseph Cvetanovski, principal and brokerage director at Visionary Marketing Group, Chesterfield, Mich.
For instance, flat extras (extra cost for a temporary period) now might run “only a couple of years” on certain testicular cancers that formerly would have had flat extras for three to five years, he says. This assumes the cancer has not metastasized (spread into the lymph nodes) and that treatment was successful.
Today, the earlier the diagnosis and the more quickly the case is treated, the better the chances for the person to get life insurance, Cvetanovski concludes.
Given this improved climate, how should financial advisors and planners approach these cases?
First, says McAvoy, continue to deliver the message to clients that “life expectancy for people with various types of cancer has improved” and that “having a medical condition like cancer usually does not prohibit a person from obtaining competitively priced life insurance.”
That is a message the insurance industry, particularly the brokerage sector, has been promoting regarding many medical conditions for many years, he says. “It’s in the roots of our independent brokerage business, which started in the 1960s, and it is still in the business today.”
Now that message is spreading to cases with cancer. “That is, if one company won’t write it, maybe someone else will.”
The agent needs to look at the whole picture, McAvoy adds. Check if the person has other risk factors as well as cancer, and find out how developed they are, he suggests.
“Theoretically, anybody can be priced to buy life insurance, but the more co-morbidity factors there are, the harder it is for insurers to price and the harder it is for people to afford the coverage offered. Still, many cases do get placed, if the risk factors are moderate.”
Another trend, according to McAvoy, is that there is more favorable pricing at the older ages than in previous decades.
Todd C. Terhorst, a financial planner in Minneapolis, Minn., says he handles cancer cases from a planning perspective. That is, he first talks with the clients about how they think the cancer will affect their lives going forward.
For instance, he asks if the cancer has affected daily living, life prospects, income and retirement outlook, and if so, how.
The answers could change planning objectives depending on seriousness of the condition, age, health costs and personal maintenance costs, says Terhorst, who is president and managing partner at Diversified Wealth Management, LLC.
It also can affect the planning strategy, he says, citing as examples: selecting the aggressiveness of investments; when to take income; and planning for early death, disability or other health-related events.
If planning uncovers insurance needs, Terhorst turns first to a review of the client’s group benefits.
“What are those benefits and the definitions? What options exist to restructure these benefits? Is there an option to buy up coverage with no insurability questions? What coverages can be COBRAed, if necessary? What insurance can be converted? How long is the client likely to remain with the employer, and how strong is the employer?”
Terhorst does not recommend relying heavily on group benefits, however. “The client may get a new job or start a new business, or the employer may change benefits or go out of business,” he explains.
Therefore, he evaluates personal insurance options, too. He says he surveys the client’s health and cancer history, builds a two-page report and then shops carriers for coverage.
Sometimes, his firm does a “test application,” filling out as much information as possible about the client and then sending it on to a carrier without disclosing the person’s identity. “We ask for the underwriter’s thoughts; how it might treat this particular cancer case.”
If the underwriter has questions, Terhorst gets the answers and, if acceptance looks promising, submits the case formally.
“This involves more time and energy on the advisor’s part, but it greatly increases the chances of the client being accepted at a good rating,” Terhorst says.
The planner also includes cancer considerations when reviewing or developing the client’s estate plan. “Most people don’t like contemplating their own death, and many people in their 30s and 40s don’t even have an estate plan,” he allows. But in view of the cancer, he says, “this must be considered.”
Cvetanovski says it is important to let the underwriter know whether the cancer treatment has been completed. (This is in addition to including the details on the cancer itself and the treatment.)
Underwriters look for that, he says. In addition, they typically require a “postpone” period of six months to two or more years during which the client waits before making application for coverage.
In recent years, the required postpone periods have been getting shorter for certain cancers “because the treatments are getting so good,” he says. Also, the aggressiveness of the carriers plays a role.
In discussing the process with clients, “you have to let the client know what is happening,” Cvetanovski stresses. “Be upfront on everything.”
For instance, he advises letting the client know that there is a higher risk to the carrier when accepting someone who has had cancer. Explain that this is why so many details are needed (type of cancer, treatment, stage and grade, follow-up status, medications if required, etc.), why there is a postpone period, and why the client may initially have to pay more (the flat extras), or be rated (pay more than standard rates).
Cancer clients tend to be very open, he says, and they are receptive to the process–if the explanation is clear; if they are applying for coverage because they need it, not because they feel fear about their cancer; and if the rate quoted is on the conservative side.
These clients are also very knowledgeable about their condition, says Robert Haran, vice president and chief underwriter for life risk management at MassMutual. “They know the stage and grade of their cancer, for instance.”
Cancer clients also are aware of the radiology and chemotherapy treatments they have had and the importance of follow-up, says Daniel George, M.D., medical director of life risk management at MassMutual. “They know how often they see the oncologist. They know the results [of their treatment]….Also, sometimes they can get the pathology report and give it to the agent.”
All of that, combined with input from agents who are educated about what to look for in cancer survivors, can give the carrier the details it needs, says Haran. “The better [more accurate and clear] the information is upfront, the closer the end result will be [to coverage as applied for].”
What types of information do underwriters need to evaluate the risks properly? The box shows many elements requested by Mutual of Omaha.
“Hopefully, we get everything we need from the application and the APS,” says Michael Wilkins, M.D., who is vice president and medical director at Mutual of Omaha.
But if we need more information, we go back to the agent and client and say, “help us along.”
It’s very important to include the follow-up information, Wilkins says. “We want to see that the people do what the physician suggested, and we want to know that this is age and risk-factor appropriate.”
The insurer also wants to be sure the cancer has not come back, he says. (For instance, breast cancers and melanomas do tend to recur, he says.)
Clients should not automatically assume a rejection, he stresses. “Companies vary in how aggressive they are in rating and underwriting for cancer.”
A number of cancers can get favorable ratings, if detected and treated in the early stages, Wilkins notes. Examples he cites include cervical, breast, prostate and non-melanoma skin cancers. George, of MassMutual, adds prostate cancer to the list and even some invasive breast cancers, depending on size and other factors.
Also, some cancers can be rated standard, while others may be rated standard with a flat extra, with some flat extras declining over the period, says Wilkins.
George notes that some early-stage breast cancers that have not spread can even be written as preferred, depending on size and other factors.
Other cases are table-rated with a flat extra. But then, some carriers may take away the table rating after 10 years, says Wilkins.
Meanwhile, some universal life carriers are using a “smoothing” approach on contracts that have large upfront surcharges on top of the premium, says McAvoy. The effect is to create an even premium in all policy years.
“All of this is individual to the case and the company’s underwriting rules,” Wilkins sums up. Where the agent and client can make an impact is in the information supplied.
Producers do try to get the best deal for their client, points out MassMutual’s Haran. So, they often will deal with multiple companies.
And some companies are very competitive on cancer cases they believe they can write, he says. “If we properly price the mortality, we want the business on our books.”
So, the insured should not be discouraged, stresses McAvoy, the incoming chairman of NAILBA.
If the agent encounters difficulties, he adds, there are brokerage agencies that specialize in insuring people with medical conditions. “You just need to find one company that says ‘yes.’”
Cvetanovski of Chesterfield, Mich., has reason to be cheered by these positive messages. He himself is a cancer survivor, having undergone surgery awhile back to remove a tumor related to testicular cancer. Right now, he is approaching the end of his postpone period, so he will soon be eligible to apply for life insurance.