Why Do I Pre-Screen Prospective Clients?

Industry-wide, insurance companies decline about 30% of all applications for long term care insurance.  My decline rate is less than 10%.

I know that long term care insurance companies will automatically decline applicants for the following conditions: Major depression, Parkinson’s, amyotrophic lateral sclerosis (Lou Gehrig’s Disease), multiple sclerosis, active cancer, oxygen use, and diabetes with poor control.  So why would I raise a person’s hopes about being insurable and take their time to fill out an application if I know he or she will be declined?

I also know that some medical history combinations will cause someone to be uninsurable.  One example would be a diabetic who, is significantly overweight, and has poor circulation.  Another would be someone who suffers from asthma yet still smokes.  Again, why would I take a person’s time when I know they will be declined?

Most insurance agents and brokers will schedule a meeting with a prospective long term care insurance client without doing any pre-screening.  I won’t.  Before scheduling that first meeting, I ask a lot of questions.  What is your height and weight?  What medications have been prescribed and why do you take them?  Do you have a handicap parking tag?  Do you use oxygen?  Has any surgery been recommended that has not yet been completed?  Then I ask the financial qualification questions: What is your approximate net worth? (If a person does not have assets to protect from Medicaid spend-down, he/she should not buy long term care insurance.)  What is your monthly income? (Can you afford to pay ongoing insurance premiums?)

If it sounds like the person I am speaking with probably qualifies for long term care insurance, we will now schedule that first meeting.

What do I do when I encounter a medical history that I am not familiar with?  Or that I don’t know which insurance companies will accept?  Well, I do what I encourage other insurance producers to do…I call the insurance company underwriters directly.  I give the age, (but never the name or other personally identifiable information), height, weight, and medications.  The question I always ask the underwriter is “If I were to submit an application on this person to your company, what would be your likely decision?”.  The response tells me whether or not my prospective client is insurable and if so, what rate class I should expect.  I repeat this process with a number of insurance companies.

Now my prospective client can fully benefit from my experience and from my being an independent broker.  I have the information needed to talk about only those insurance companies offering the best value* and eliminating those which are unlikely to approve my prospective client.

After all this, why do I still occasionally have an application declined?  There are two reasons:  1. Occasionally an insurance company underwriter will tell me that the presented medical history is marginal and could go either way.  It could still be worth trying.  2. Sometimes medical records will contain a test result or other information the person was not aware of.

*Once I know that someone is insurable and at what rate class, I go to a subscription software program that tells me how much comparable policies from different companies will cost.  This allows me to eliminate the policies that are too costly.

Why do I pre-screen prospective clients?  To save time and energy of those who would not be able to obtain long term care insurance.

Disclaimer: Actual policy language, rather than the contents of this eNewsletter always takes precedence.  Long term insurance policies vary from company to company & within the same company.  Raymond Smith, The Long Term Care Specialist, does not give legal or tax advice.  Consult your tax advisor or attorney for these matters.

 

© Raymond Smith, The Long Term Care Specialist, 2011