Medical Underwriting today requires two very different phases of assessment with the variety of living benefits currently offered and sold. While AgencyONE is consistently estimating MORTALITY for the life product, closer attention to your client’s MORBIDITY risk is required when Long-Term Care or Chronic Illness Riders are part of the case. These two phases of assessment may be why you are asking the question – WHY is My Client a Preferred Life Risk, but Declined for Long-Term Care?
MORTALITY VS MORBIDITY
Simply put, when underwriting MORTALITY, the focus of our medical assessment is on the probability of DEATH. However, the probability of becoming disabled exceeds that of death. To go on a Long-Term Care claim, the applicant must demonstrate an inability to perform two of six activities of daily living (bathing, continence, dressing, eating, toileting, transferring), or have a severe cognitive impairment. As such, when underwriting MORBIDITY, we are looking at conditions that could result in a long-term need for different levels of convalescent care. There is a greater focus on an applicant’s OVERALL state of HEALTH and FUNCTIONALITY, and how it could impact their ability to care for themselves.
In this ONE Idea, we are going to walk you through some of the differences in underwriting and demonstrate how knowing the CORRECT carrier for mortality AND morbidity can greatly impact the success of your case.
LONG-TERM CARE RIDERS (LTC) VS CHRONIC ILLNESS RIDERS (CIR)
A traditional LTC rider is underwritten similarly to a life insurance product. Impairments are carefully vetted and offers can range from preferred to a table rating, SEPARATE from the life offer. Chronic illness riders fall into a “yes” or “no” category. Many have a short “knock-out” list, but if the life offer is table D/4 or better the rider generally CAN BE included.
A FEW MORBIDITY RED FLAGS
Osteoporosis is a metabolic bone disorder which results in a reduction of bone mass. As the bones deteriorate, they weaken which can lead to fragility and fractures. Bone density is measured by a test called a DEXA scan. The severity of osteoporosis is underwritten based on that score and/or a history of falls and fractures. Osteoporosis would not generally affect the life offer, but it ALWAYS puts LTC offers and insurability at risk.
Recent surgery, particularly ORTHOPEDIC, would only affect the life offer if a complication or chronic pain component existed. The TYPE of surgery alone can make your clients uninsurable for a traditional LTC rider. Certain carriers will DECLINE LTC for applicants who have had spinal fusions, multiple back surgeries, or joint replacements because of chronic osteoarthritis.
Physical therapy is a treatment commonly found in medical records for a multitude of reasons. We would not give this a second thought if your client is applying for a life product alone. However, clients actively receiving physical therapy are declined for LTC for about 6 months after it concludes. Then, ratings would depend on WHY physical therapy was ordered and how the client is functioning thereafter.
COVID “long haulers” continue to emerge and many have residual physical and emotional symptoms. For now, each applicant will be handled on a case-by-case basis; however we anticipate guidelines for LTC/CIR and life underwriting will continue to evolve.
A WORD ON COMORBIDITIES
Comorbidities are the presence of two or more diseases and/or medical conditions. Often, one condition has the potential to make the other worse. For example, an applicant with diabetes who is also obese may have a more difficult time controlling his/her blood sugar and cholesterol, is less likely to be exercising, and could be considered a less favorable risk. Underwriters like long-term stability when it comes to ANY chronic condition. When your clients present with comorbid conditions, the “big picture” is scrutinized more closely. Greater attention is paid to the individual’s:
- lifestyle and social habits;
- medical surveillance and follow-up;
- compliance with treatment; and
- mental health history, cognition, and social support.
NOT ALL CARRIERS UNDERWRITE LTC THE SAME – CASE STUDY
Jane Smith is a 59-year-old, nonsmoking female applying for a $1MM policy with an LTC rider. She has a history of high blood pressure and high cholesterol which is medically managed and well controlled. Jane had in-situ breast cancer 10 years ago without recurrence, is postmenopausal, and has suffered bone loss. Calcium and vitamin D supplements are a part of her regular regimen and she has no history of falls. The APS indicates Jane exercises regularly, is up to date with screening mammogram, PAP testing, and colonoscopy. Her recent blood work is normal and most recent DEXA scan showed her greatest bone loss at -2.9, which indicates that Jane has osteoporosis.
We know immediately that at least TWO carriers would DECLINE the LTC rider due to the DEXA score and that one may be MORE competitive on the life offer with this history. AgencyONE presented the case to the two companies we felt would be most competitive for this client:
$1MM UL policy, all pay to age 100, LTC at 2% – LTC benefit $20K monthly.
IF LTC OR CIR IS A PART OF THE CASE, WE NEED TO KNOW UP FRONT!
It is imperative to let us know up front when LTC or CIRs are included in the case. This changes the path of the case, not only in the APS information we need, but which carriers we price and recommend for your client. Details about your client’s lifestyle that will provide the carriers with an accurate and holistic representation of the case are also very important to include.
Long-Term Care and Chronic Illness Riders offer an extremely valuable benefit for your clients. If you are not talking with your clients about these options, START NOW. Our case design team are experts with the various products available. Together, we can help you choose the ideal carrier(s) AND negotiate the offer your client deserves.