Getting through the underwriting has become a major issue in buying life insurance, whether whole or term. Much of the difficulty has to do with the risk classes assigned to applicants, and planners have found that finding coverage for clients with health risks like cancer, previous heart attacks, or diabetes, is difficult, impossible, or prohibitively expensive.
That’s not necessarily the case any more, according to Michael Kalen, executive VP for individual life at The Hartford. In fact, he says, the cost of term life has dropped substantially over the last ten years (for an example of these falling rates, see this story in the November issue online at www.investmentadvisor.com). The decrease has been so dramatic, Kalen asserts, “that even if the client is 10 years older than when they first [applied], as long as their health is still good, they frequently can still get life insurance cheaper than they could 10 years ago.”
Ah, but there’s the rub: “As long as their health is still good.” What about clients whose health is not good? The ones who have already been diagnosed, for instance, with breast cancer or prostate cancer? Can they get coverage–at any price? In some cases, according to Kalen, the answer is yes.
The Hartford has begun a new program that offers coverage to applicants who are breast cancer and prostate cancer survivors. Says Kalen, “Our program allows early-stage cancer survivors to qualify for standard insurance rates without a waiting period after their treatment.” In the past, he says, such applicants either found themselves in the high-rate group, or would have to wait “between one and five years after surgery to get coverage.” Even then, he says, they would “still have to pay more; three times more.” Now, however, that’s not true, and much of the change has to do with the overall fall in term insurance rates.
“There are three major contributors” to the lower cost of term life insurance, notes Kalen. The first is simply that people are living longer. Second, he says, is improvement in the treatment of specific diseases. The third reason Kalen cites is that life insurance companies have become much more efficient in collecting information and accepting candidate risks that it “allows us to better classify people” into risk categories.
The Hartford now offers several different levels of underwriting classes that provide coverage more cheaply, even for cancer-survivor clients. Also, thanks to those factors that Kalen has mentioned, even heart attack survivors, people with diabetes, and former smokers, he adds, should review their coverage frequently, “because their health may have changed and they may qualify for lower rates.”
When first announced, the Hartford’s cancer programs laid some ground rules. The breast cancer program made life insurance available for up to 100,000 women who had been treated for low levels of breast cancer; the prostate cancer program did the same for up to 250,000 men who had been treated for low to moderate levels of prostate cancer. This was at standard rates– “the rates most healthy people pay,” according to Kalen, and without the one- to five-year waiting period.
Making Life Easier
Sometimes even getting regular life insurance for a client can be difficult, but one wirehouse broker reported no problems with The Hartford on behalf of a client who is a prostate cancer survivor.
The broker, who asked not to be identified, does not sell policies himself, but sends his clients to insurance specialists. He’d originally steered his client to an agent for the purchase of a seven-year-pay policy for $100,000. At the time, some 15 years ago, the client was cancer-free.
When, after “ten — twelve — fourteen years,” the client asked for extra money from his portfolio to pay the premiums on his policy, he learned that the agent had sold his client a completely different policy. The broker went looking for new coverage; in the interim, however, his client had been diagnosed with and treated for prostate cancer at age 58. Although the client is now 66, and has been in remission after successful surgery, such an event “puts a cloud over your head for the rest of your life, as far as insurance is concerned,” says the broker.
The insurance rep at the broker’s wirehouse sent him to The Hartford, and the client now has a new policy in place, guaranteed to be paid off in five years, for essentially the same coverage and for less than the original policy cost, the broker reports.