I have a 54 y/o prospect I just submitted for $500k in term life. He beat cancer 7 years ago and I submitted him at standard. He believes he should get a preferred rate because he's been healthy for the past 7 years and I pounded it into his head why no LI company will rate him better than standard....Anyways, he asked me about getting 3-4 small policies that don't require a paramed to be taken so he could get better rates.
Do these "no medical exam" LI policies have a stipulation about this? I'm assuming the MIB will alert the carriers?
The only thing non-med will prevent is a situation where the client thinks he's healthy yet might have something like HBP, cholesterol issues or something else the paramed exam may uncover. A non-med app won't have much to do with noted pre-existing conditions. If I had brain cancer 2 years ago and filled out a non-med app I'm still declined.
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I have a 54 y/o prospect I just submitted for $500k in term life. He beat cancer 7 years ago and I submitted him at standard. He believes he should get a preferred rate because he's been healthy for the past 7 years and I pounded it into his head why no LI company will rate him better than standard....Anyways, he asked me about getting 3-4 small policies that don't require a paramed to be taken so he could get better rates.
Do these "no medical exam" LI policies have a stipulation about this? I'm assuming the MIB will alert the carriers?
This is not a viable route. As John noted, no-paramed does not mean there are no medical questions. In addition, most or many of the non-meds do not have preferred ratings- just stardard smoker and non-smoker. On top of that, they are all Table D type rates because the companies are taking a greater risk without a paramed. So, even if a person did lie their way through the app, the rates are horrible.
Standard rating for this person is a very good rating. The best you can do is get him a standard rating with a competitive carrier such as West Coast or Genworth. Ask him if he is more concerned about being rated standard or preferred or more concerned about premium cost. You can go to State Farm or Old Mutual or one of those companies and get a preferred rating (sometimes, not with this client) but their preferred is more than a standard with a more competitive carrier.
Also, it should go without saying that this guy is not in any preferred category. His chances of not getting a serious disease certainly are not less than that of an average bear. Again, standard is a good rating for him, provided that it was with a good company.
In fairness to clients though, the medical establishment tells them that if they are cancer free for 5 years or more that they have probably beaten it so they want to be treated like virgins again. In reality, the data continues to show a very elevated risk long after five years even though making it five years is an excellant accomplishment.
- Any version of 'non-medical' policy is rated higher than medical / fully underwritten policies. Writing several small apps will likely result in a higher overall premium. Try it out. Price 5 $100K no-paramed policies vs a single $500K policy rated standard with your favorite life company. The 5 100K's will be more. If he thought he might get preferred rating with the no-paramed, well, think again.
- Policies are additive on medical. If I can write $1,000,000 of coverage on someone before I need an EKG, then if he already has $1,000,000 of coverage, and I write another $100,000K policy, I'll have to get the EKG. Now, if you mix and match carriers, and don't report all the other coverage, you might get around this, but within the same carrier, or if you properly identify other coverages, you'll be required to get the medical.
I would start preparing him to be rated. Chances are, you won't even make standard. Maybe, depends on a LOT of other factors....
How do you sell rated policies? In a very kind, gentle voice, explain to them that they are approaching the uninsurable line, that things happen during our life journey that make us go from easy to insure, to virtually uninsurable. The good news is, you have him approved. Unfortunately, because he is closer to 'uninsurable' than we like to admit, there is a slight increase in premium, but this means getting the insurance NOW is more important, to protect his family.
Yep, we all want to live forever. We buy life insurance because we bet we won't. Ironic, isn't it. (Don't tell the client this....)
Just for #### and giggles, I went to several "guaranteed issue, no medical test" websites? guess what? There is no such animal. if you answer certain questions a certain way, your done.
What I have been told is every app goes into underwriting as super preferred and then works it's way down from there. Alot will depend on your guys APS.
I have seen Colonial Penn write everyone with no med questions, you know, that policy for pennies a day but when you do look at it...graded benefits for 2 years...that is still rated as far as I'm concerned.
No exam LI question
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