Margie Barrie, a veteran long-term care insurance (LTCI) agent, marketer and educator, has been writing articles about long-term care (LTC) planning and related issues for years.
Today, she takes a question about trends in LTCI underwriting.
Question: My number of declines for LTCI applications seems to be increasing. Is it just me, or are other agents having the same problem? What advice can you provide to increase the percentage of policy applications that are approved?
Answer: You are not alone in having more applicants declined. I too am having this problem. Declines are now running almost 40 percent.
To get advice on how to reverse this, I asked Bob Starek, a regional director with ACSIA Partners, about the advice he is providing his agents. Bob had asked underwriters from several carriers for suggestions. Here is what he learned:
1. Are your declines increasing?
The 40 percent figure is probably fairly stable from five and 10 years ago. However, more applications are being received for more medically compromised applicants.
2. Has underwriting gotten more restrictive – or are agents not doing their due diligence?
It’s a combination of both. Underwriting has evolved along with current health statistics and industry claim information. In most cases, when there are decline problems, agents are not asking the right questions about health conditions and health status to rate their clients appropriately, when class ratings are applicable.
3. What recent adjustments have you seen?
Recently adjustments were made to the uninsurable drug list based on FDA reclassifications. Thyroid guidelines were loosened, and tobacco use was defined to include all nicotine products.
4. What conditions are being declined the most?
Routine narcotic use.
Pending treatment or current physical therapy.
Injection therapy or physical therapy to weight-bearing joints or the back within six months of application.
Advanced disease processes affecting activities of daily living (ADL) or instrumental activities of daily living (IADL) independence.
Uncontrolled diabetes with multiple complications affecting well-being.
Non-compliance with physician recommendations for treatment or further testing.
5. What specific questions should agents be asking to do a better job of probing and providing information?
Be more observant as to who is answering the questions being asked. Is it the applicant, or is it the family member sitting with the applicant?
Be aware of vague answers with respect to past treatments, diagnosis dates and medications. Do applicants have to write everything down to remember it?
When arthritis or back problems are part of the discussion, questions need to be asked about any past surgeries, any recommended surgeries, and use of injection therapy, physical therapy and medications.
When asking about diabetes and complications, obtain the HgbA1c level, and ask about symptoms of the complications, not the diagnosis itself. You may get a more accurate response from the client if you phrase your question in “symptom” form, not “medical terminology” form. For example, ask: Do you have tingling in your hands or feet?
With any health conditions your clients have, ask if they see a specialist or how often they visit a physician for that problem. Verify the last visit and ask if they have any outstanding tests pending.
6. If an agent does pre-underwriting and the underwriter tells them to submit the application, what are the chances for approval?
If the information provided on the pre-qualification is consistent with medical records and other information obtained during the underwriting process, chances for approval are extremely high.
7. Do lifestyle statements provided with the application increase the possibility of getting an applicant approved?
The term “lifestyle statements” refers to more detailed explanations of the person’s condition and, from a positive perspective, why your clients are viable applicants for LTCI coverage
Physician letters or agent statements attesting to the lifestyle of a client could very well sway an underwriting decision in a more positive direction, agents say. An applicant’s lifestyle is just one piece of an overall health puzzle that an underwriter can consider.
8. What other questions should I ask the client?
Don’t forget to ask about any pending office visits, physical therapy or upcoming testing.
Ask about the diagnosis associated with each medication an applicant is taking and then get the history related to the condition, including the dates the medications were last adjusted.
9. What sources can I use to further educate myself about underwriting?
Use the underwriting guidelines provided by the companies.
Do an Internet search for anything you are unsure about, but be sure you are getting information from reputable websites.
Some companies allow you to call in and speak to the underwriters or email them questions; take full advantage of that opportunity.
10. Any final words of advice?
Prequalifications, when done correctly, will increase your issue rate.