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I quoted a prospective client a Medicare supplement rate that was significantly less than the plan he was currently on. I mentioned that he needed to answer the health questions, however, because he was no longer in his Open Enrollment. He would have to go through underwriting. He was upset and said no way. I asked why. He told about when he applied for life insurance. He went through the underwriting process. A nurse came to his home, weighed and measured him, took blood and urine, asked a bunch of questions. Then they had to get reports from the various doctors. One of the doctors had to write a letter about a particular health issue. The whole process was long, involved, and intrusive. There was no amount of money that could induce him to go through it again. When I said I could probably do the Medicare supplement underwriting in sixty seconds or less, his tone changed.
So what is underwriting? It is a simple process that insurance companies use to find out about you and your health. You don’t have to go to your doctor to be poked or prodded. The whole process can be done with a few questions in person or over the phone. It is a set of basic health questions that you answer.
What are the health questions? Let me group them into four categories: knockout questions, height & weight, current issues, smoking/non-smoking.
What are knockout questions? They are questions that have to do with serious medical conditions. In other words, if you have this serious medical condition, you are ineligible for a Medicare supplement. You are knocked out of consideration. Now to clarify, you can’t be denied Medicare, but a private insurance company can deny coverage for a supplement outside of your Open Enrollment Period.
What are some examples of knockout questions? Are you currently confined to a wheelchair, nursing facility, or hospital bed? Do you currently receive assistance bathing, transferring, toileting, eating, dressing or need the assistance of a walker? In the last two years, have you received treatment for cancer, leukemia, heart attack, congestive heart failure, multiple sclerosis, chronic kidney disease, diabetes with hypertension, stroke, etc.?
The second category of questions has to do with height and weight. This is always a difficult question. If I asked my wife her weight, it would be very quiet and cold in the Grimmond household for a while. Fortunately, I have never been thrown out of anyone’s home or had things thrown at me when I ask that questions. Height and weight is an important determiner of future health, so it has an impact on price.
The third category is current issues. For example, you may have a diagnosis for a future treatment, like a knee replacement or cataract surgery. An insurance company will want you to take care of that before you change supplements, or they just won’t cover that procedure for the first six months. You may have respiratory issues in the past that do not exclude you now, but if you are currently being treated for the issue, that could prevent you from getting the supplement for a time.
The fourth category is smoker or non-smoker. That one should be obvious. There is plenty of medical evidence about the health risks associated with smoking. Smoking also includes chewing. I met with a gentleman who described himself as a non-smoker, but when I pointed out he had a circle print on his back jean pocket, he fessed up that he dipped—on occasion. That is still considered a smoker—tobacco user. Same thing, as far as the insurance company is concerned. Smoker/Non-smoker is the one health question that can be asked during Open Enrollment.
Why does this matter to you? Because your answers determine whether the insurance company accepts or denies you. It determines your health category and consequently your monthly premium.
Underwriting is not a difficult or a daunting task with a skilled insurance agent. It just takes a few minutes of your time, and you may be able to save yourself some money and maybe improve your coverage as well.
The key thing to understand is that not all insurance companies have the same underwriting guidelines. Some may be more lax or restrictive than others. They may be lenient on one condition or more severe on another. That is when an experienced agent can help you with getting the best outcome for your underwriting. He can guide you to the company that will be most favorable to your condition for the best possible price.