Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent

UPDATED: Oct 17, 2020

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Picture this…

Bill is a small business owner employing 25 people. He is also a husband and father of 3 children under the age of 18. Bill’s employees count on Bill being around to operate the business and provide them steady employment. Bill’s family also depends on him to be the primary breadwinner in providing for their future.

Without a doubt, Bill has a tremendous need for life insurance protection should he meet with an untimely death.

Why Should You Purchase Life Insurance?

From a business perspective, life insurance could provide cash to keep the business running and employees paid while new ownership gets in place. If a buy-sell agreement has been set up, then life insurance could provide for partner’s to buy Bill’s share of the business from his estate.

From a personal point of view, life insurance coverage could provide ready cash to pay off any outstanding home mortgage, set up college funds and allow his family to continue their current lifestyle.

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Life Insurance with A Pre-existing Medical Condition

The Problem…

Unfortunately, Bill suffered a heart attack 5 years ago and subsequently had to also have cardiac bypass surgery. Bill knows he has a tremendous need for life insurance but is worried about finding a company that will offer him coverage. He is also worried about if he can find coverage, will it be affordable?

The Solution…

Bill calls his property and casualty agent who has handled his home and auto coverage for years and explains his situation. Bill’s auto agent tells him he’s afraid he cannot help him since his primary company would decline him due to his medical history. And since he is a captive agent he has no other alternatives. Bill’s auto agent tells him he does know an agent that specializes in the “special risk” life insurance market and refers him to this expert agent.

An Expert Agent Can Help with Pre-existing Conditions

Life Insurance agent helping client with pre-existing conditionLike many people, Bill is surprised to learn that there are agents who are experts in finding affordable life insurance coverage for individuals with pre-existing medical conditions like heart disease, diabetes, etc.

Bill meets with the “special risk” agent who explains how the process works when looking for the best company.

The agent explains that this is a very niche area of the life insurance industry and that most agents are not experienced in knowing how to find their client the absolute best rate. In fact, many agents simply don’t have a working knowledge of medical impairments that allow them to ask the right questions of their clients.

He also explained that it is vital to have long-term relationships with the underwriters of the different carriers that specialize in certain medical conditions.

The agent is the one person who can negotiate on your behalf, therefore it is vital that the agent has formed relationships with the underwriters. In fact, finding the absolute lowest premium on a special risk life insurance case is sometimes based more on the relationship between the agent and company than anything else.

He explained that an independent life agent will have access to multiple carriers. But, when it comes to underwriting pre-existing medical conditions, the actual companies that specialize in this area of underwriting is quite small.

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What NOT to Do

Let’s look at how an agent should not handle this particular case and then the best way to handle this protection needs.

In Bill’s particular situation, a non-experienced agent who does not understand how this niche works, may simply suggest to Bill that he should apply to several carriers and “just” see which one comes back with the best rate.

This could be a huge mistake for several reasons:

  • First, are the insurance companies you are applying to even interested in someone with a history of heart disease and by-pass? If not, you could be wasting your time and also end up with a declination in your file.
  • If multiple companies decline you for coverage, a code is then sent to the Medical Information Bureau (MIB). This code tells any future companies that you apply to that some type of adverse action was taken regarding your application.
  • This hurts your chances of finding affordable coverage for a carrier that “may” have had a true interest in looking at your application.

The bottom line is, it cost insurance companies money to underwrite applications. They spend money on processing the application, paying for medical exams, lab studies, EKG’s and doctor’s records.

When an insurance company gets an application and runs the MIB report, it will see that an individual has applied to every insurance company under the moon.

They may simply say, “we see where this individual has applied to multiple insurance companies and been declined.”

So, instead of them wasting their money on underwriting they may simply pass altogether and reject the application.

And, it’s important to remember, that this insurance company may have been willing to make an offer (perhaps even the best offer) but is now not interested in reviewing your application simply because of the process the untrained agent completed. Here is how an experienced and knowledgeable agent would have handled the process.

The RIGHT Way to Shop for Life Insurance with a Pre-existing Condition

An experienced and knowledgeable agent in the “special risk” life insurance arena would first do some preliminary field underwriting. This entails asking the client detailed questions regarding his current and past medical history.

This allows the agent to get a better picture of the client’s overall health and helps the agent decide on the best path to the best policy to satisfy the client’s needs.

Some of the questions that might be asked of Bill regarding his cardiac history could include:

  • What was the date of the heart attack?
  • Was the heart attack brought on by stress or exercise or during rest?
  • When was the by-pass surgery?
  • How many vessels were by-passed?
  • Do you know or can you find out the exact name of the vessels that were by-passed?
  • Are you currently taking any prescription medications? If so, details.
  • Have you had any follow-up test done since the surgery like stress test? If so, was it normal?
  • Do you have any history of high cholesterol, diabetes, high blood pressure, irregular heartbeat?
  • Any tobacco use within the last 5 years?
  • Current height/weight?
  • Any other major health problems?

With the answers to any or all of the questions in hand, an expert agent can then go to work in locating the best company for Bill’s situation. Thru years of dealing with insured’s in Bill’s situation, most special risk life insurance agents will already know the 3 or 4 carriers that will offer the best coverage for this situation.

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An Expert Agent Can Find The Best Rates

The expert agent will then hit the phones and work the relationships of the underwriter’s that may offer the best rates. Once the agent has spoken to all the carriers that may have an interest in making an offer on coverage for Bill, the agent will comprise the best quotes available from those carriers.

It’s important to remember that the tentative offer from the insurance company is just that. A tentative offer is based typically just on phone conversations regarding the answer’s to the questions the insured answered. Typically, a carrier has not seen any personal physicians’ records or looked at any lab results or EKG’s. This process just gives the agent and the insured the best guess at what the final offer will be if the insured decides to formally apply for coverage.

Why is this process important…

When a special risk agent uses this process it does a couple of things. First, it keeps the insured out of the MIB file. Since the agent just spoke on the phone with the underwriter, nothing is relayed to MIB.

Secondly, it saves a lot of time and money. Now the insured doesn’t have to fill out multiple applications for different insurance companies, get examined, have blood drawn, etc. without first knowing what the likely outcome will be. This saves a lot of frustration on the insured party.

Thirdly, this allows the agent to basically shop the coverage for the client without the client having to jump thru a lot of hoops. This allows the agent to then only present the best carriers rates to the insured. The client will know pretty much the cost of coverage (barring in unforeseen surprises) before they even apply and go thru the medical exam.

Final Thoughts on Using an Agent to Find the Best Policy

Using an expert agent that specializes in finding the most affordable coverage for individual’s looking for life insurance with pre-existing medical conditions will save the client frustration in searching for those carriers that offer the best rates for their particular situation.

More importantly, it will save you hundreds if not thousands of dollars over the lifetime of your policy.