How life insurance underwriters assess health issues

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How life insurance underwriters assess health issues

Six years ago, John had a heart attack. It shook him up – financially and emotionally – and he decided to completely change his life. He picked up a pair of running shoes and just started running – slowly at first, but within a year he had lost twenty pounds and was training for a marathon. His doctor said that he was in the best shape of his life. So it came as a shock to John when his life insurance application was denied. Naturally, he was frustrated. "They’re basing this decision off of the guy who had a heart attack, not me!"

When a life insurance application is declined, it’s usually because of a health issue. If the health issue or event happened years ago – like John’s heart attack or an instance of cancer – and you’ve moved past it, you may wonder why it’s still affecting your life insurance rates.

If you’re shopping for life insurance, you know that the process of assessing your personal history and health is called "underwriting." But while you may think this person on the other side of the policy is the enemy, they’re actually on your side – they want you to buy a policy, and don’t want to have to turn you away.

Think of underwriters as detectives. The health and lifestyle information you give them are clues, and the more clues they have, the easier it will be for them to find one that gets you a more favorable life insurance rate (or, in worst case scenarios, the clue that will turn a declined application into a standard rate).

Unfortunately, underwriters often have their hands tied by the fact that they can’t see the future. What do we mean by that? Underwriters have to assess risk, and the only information they can use is information that already exists. While that may seem obvious, it’s very different than how you or your doctor may look at your life.

Both you and your doctor are very focused on what works for you, personally. But an underwriter has to look at statistics – what’s the likelihood that someone with an instance of uterine cancer in her medical history will get cancer again? While your doctor can help you make changes constantly in order to stay healthy, your underwriter can only go on statistics and past information.

Take something like John’s heart disease as an example. John had bypass surgery after his heart attack. After that procedure, John needed to make lifestyle changes typical of heart disease patients: more exercise, losing weight, quitting smoking, etc. If John didn’t make those changes, there’d be a high chance of him having recurring problems from heart disease. Once John made those changes, his doctor helped him effectively manage his heart disease so that it no longer poses a health risk.

An underwriter might be more concerned with simply how long ago your first instance of heart disease was. Time is important because underwriters can’t predict the future – if you had a heart attack last year, there hasn’t been enough time to prove that you’re making the lifestyle changes necessary to manage the disease.

Underwriters will also pore over your medical records, looking for answers to questions like how much blockage was there, what do your current echo, EKG, and treadmill results look like, and how often do you follow up with your doctor. They will attempt to find any quantifiable data that could affect your case favorably, and allow them to offer you life insurance. The more medical history you have and the longer it’s been since the event, the more likely it is that you’ll have your life insurance application accepted.

Some carriers may not accept you unless a certain number of years (as many as ten in some cases) have passed since the last occurance of your disease. Some may never accept your application, and you’ll need to apply with another company. In many cases, the best life insurance classification you can receive is Standard. (Read more about what these life insurer classifications mean.)

You might think your outlook looks a little grim – at least when it comes to getting life insurance. But don’t give up. Just like getting healthy after a major medical crisis, getting life insurance can take some hard work and perseverance. Ultimately, the financial security of life insurance is worth the effort.

What should your next steps be? Take a look at these articles for more information on how to continue the shopping process:

-> What do I do if my life insurance application is declined?

-> 3 things to do if the life insurer offers you a higher rate than you were quoted

Image: Claude Robillard