Life's Disappointments

[Welcome Industry Radar readers!]

Life insurance, that is.

Although I've never formally quantified it, life insurance comprises about 40% of my practice. Two recent experiences with this fairly simple product have left me disappointed and angry.

First, in some 25 years "in the biz," I've helped many clients file death claims on loved ones. For the most part, it's a pretty simple process: call the carrier to report the death, confirm mailing information, wait a couple days for the forms to arrive, and on from there.

After my mother died a few weeks ago, it took a while for me to feel up to starting the claims process. A week, in fact. So last Wednesday, I called the three carriers with whom Mom was insured, and asked them to send the paperwork. We confirmed mailing info, and that was that. Two days later, I received the package from Western-Southern Life.

I'm still waiting, a week later, for the forms from General American and TransAmerica.

This is not a complicated process: once the carrier's confirmed the mailing address, they drop the forms in the mail. It doesn't take a week for the envelope to arrive; in fact, I received the W-S one in two days.

Life insurance is a promise to pay, and we trust the carriers to at least get the easy parts right. Neither General American nor TransAmerica seem capable of doing so, and I won't take the chance that they'll disappoint my clients, so I will no longer be selling their products.

At the other end of the life insurance process, I'm beginning to change my mind about how I handle applications. I always have the client fill out the app itself, with guidance from me so that they know which parts to answer and which to skip. One question that has always bothered me, and which I now find completely unacceptable, is the one regarding family history. It's not that the information is irrelevant (it may well be), but it is a fundamentally unfair and flawed underwriting tool.

How so?

If I'm adopted, then I have no idea whether my father died at age 47 of acute liver failure, or remains a robust 97 year old golfer. And if I happen to know that my mother died of leukemia at age 37, there's absolutely no way the underwriter (or claims person) could ever know this. While I will never suggest that a client lie on an application, I think that I will now point out this problem to my clients, and suggest that they answer however they deem appropriate, keeping in mind that, unlike the medical questions which can be checked, the family history is completely unavailable to the insurer.

'Nuff said.

ADDENDUM: Although I've blogged on this subject before, I think it takes on new relevance in light of the recently passed legislation regarding "genetics discrimination." Although that bill seems to focus only on health insurance, it doesn't seem to me to be much of a stretch to apply it to the life side.

So not only is it a fundamentally stupid question, it may well now be illegal.