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.