Thursday, February 23, 2006

A Step in the Wrong Direction

New clients come to me in several ways. Some as a result of advertising, some from referrals. Others find me quite by accident.

One of my newest clients came to me by way of taking a step in the wrong direction. Like many, they were looking for a way to save money on health insurance. They applied with a low price carrier and were almost immediately denied coverage within a few days of making application. Seems the health issue they considered more of a nuisance than anything was preventing them from being approved.

Once you have been denied by a carrier it becomes more difficult to obtain a fair review by later carriers. Every application has a gatekeeper question that goes something like this.

“Have you had coverage denied, postponed, modified or rated?”

That pretty much says it all. Answer yes and you are subject to intense scrutiny. Answer no and you have committed fraud and run the risk of having claims or coverage denied at a later date.

After much discussion and a review of the medical condition, I started polling my top 3 carriers. I work closely with these carriers and have a good feel for the way they underwrite.

I also have field underwriting manuals for all of these carriers as well as a dozen more.

The results from my inquiry were a “no”, a “maybe” and a “probably”.

The “maybe” was a strong carrier not known for aggressive underwriting but is almost always in the hunt on price. The "probably" is a lesser known carrier but strong in many ways and has recently become more reasonable in underwriting.

The “maybe” indicated a rate of $180 per month with a rider for the medical condition. The “probably” told me they would most likely cover the condition but with an extra premium bringing the total monthly to $300.

The condition is a “slight arrhythmia” that is asymptomatic and has remained unchanged in 15 years. The condition is controlled by two inexpensive medicines that cost less than $40 per month.

My new client did the obvious and wanted to apply for the lower priced plan. I counseled them by saying this might not be a wise choice. They stood fast so I countered with a form where they would attest that I showed them a plan with full coverage which they rejected.

Then they were the ones who balked.

In their mind, the $120 monthly premium savings more than offset the $40 monthly med cost. No argument there. What I did next was to explain why each carrier took their respective positions.

The one with the exclusion rider was not dodging the $40 monthly meds or even the annual EKG. They were more concerned about potential stroke or M.I. down the road.

The carrier with the higher premium was willing to absorb not only the meds and the annual EKG but the potential heart attack or stroke that could occur at any time.

Or never . . .

In the end the client agreed to make application to the carrier with the higher premium. I had not only stated my case in a logical and comprehensive manner, but they also agreed I had been more helpful than anyone else who had reviewed their case . . . including the initial agent who simply ran away once he had a rejection from his carrier.

This is not about me or my skills. Rather it is all about making an informed decision and not just taking the lower priced plan for the sake of saving money now. The $120 monthly savings could have gone for other things besides health insurance premiums. But all of that would have been worthless if the annoying medical condition were to take a turn for the worse.
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