Friday, October 06, 2006


Perhaps the greatest compliment an agent can receive is a referral; they are the lifeblood of any professional who intends to stay in this business. And the most valuable of these is when a client recommends an agent to relatives. After all, you may only see friends from time to time, but you’ve got to deal with your brother-in-law every Thanksgiving.
Today I was paid one of the latter: one of my clients referred her sister to me, telling her that I had been helpful in securing medical cover for her family. The sister – we’ll call her Denise – lives in another city, about an hour away. Her husband, who owned his own business for a number of years, has sold it, and now needs to replace his “lost” coverage. Since the group plan had been through the local Blue Cross (BX), they thought it would be a good idea to just call up said BX and apply for coverage. They applied for a generic co-pay plan, complete with drug card.
Pretty cut-and-dry, at least so far. So why was she calling me? She’d already made application, and received an offer; what role could I possibly play?
Turns out, Denise was diagnosed some 10 years ago with fibromyalgia, for which she takes a particular medication. The problem is that this is one of those conditions (and meds) that insurers intensely dislike, a fact which an agent would have known, and who could have helped avoid the ugly result:
While her husband and daughter were approved for the co-pay/rx plan, she was offered a “stripped down” version at a greatly inflated price. As long-time IB readers know, having been declined or rated for health insurance once, obtaining coverage later becomes problematic. She is appealing the decision, and called me to see if I could offer a better alternative.
Knowing that her existing cover would go away at the end of this month, I advised her that she should accept the offer, while continuing the appeal. Better to have expensive, less efficient cover than none at all. I also told her that I’d see what my other carriers could do.
And then I started asking a lot of questions. After dispensing with the “normal” ones (height, weight, other meds, etc), I asked if she had ever heard of an HSA. She had, and they had actually discussed this. In fact, she asked me if it would help her appeal if she were to go that route. Sadly, it probably won’t: carriers don’t really care which configuration one chooses when they are underwriting (that’s another post). On the other hand, she should: I helped her work through the math, and see that by going with the HSA plan, they could almost completely fund the loss account, and still save money. I suggested that she call up the home office, and tell them that she wanted the HDHP (high deductible, HSA compliant plan). She’ll still be able to appeal the rate-up (good luck with that), but even if that failed, the family would be money ahead.
Needless to say, she was grateful for the time I took to help her noodle this through, and I took the opportunity to tell her that, next time, she’d be far better off working with an agent (preferably me, of course) rather than buying directly from a carrier.
Why? Well, a number of reasons. First, the folks at the home office are order takers, not professionals, and aren’t trained to offer this kind of advice (such as the HDHP/HSA idea) to prospective insureds. Second, since they work for the carrier, they're not going to be eager to help one pursue underwriting appeals.
Third, and perhaps most important, an independent pro would know which carriers to look at in the first place, and may have helped her avoid the problem (or at least minimize it). For whatever reason, folks believe that buying directly from the carrier (or from an internet service) will save them money, whether it’s life or health insurance, coverage for their cars and houses, or even their business liability cover. These people are sadly misinformed, and end up paying for an agent (an advocate) without actually getting one. That is, the commission is already built into the price, so someone is getting it, just not someone who’s accountable to you.
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