More of my experience that close to underwriting is in group. But I do recall seeing one cross my desk where the name of the group was vaguely familiar. What do they do? “feed materials” is what the sales rep put on the form. Sounds vaguely agricultural, right?
Researched. Uh, yeah. They made feed materials, all right. Feed materials for nuclear bombs. I recognized the name because they were located right next to the Girl Scout camp I used to camp at and they had to close the Girl Scout camp because radioactive material was leeching into the groundwater. Cancer rates amongst employees were so high that there were multiple news articles on the subject from local papers that turned up in my 10 minute Google search.
DTQ. Sales rep was obviously pissed that he dumb lucked into an actuary who was familiar with the region.
When comparing rates, keep in mind that the $25/month is going to increase as you age whereas a level-term premium will not. So it’s not an apples-to-apples comparison.
That said, the Additional Life through work could be a great choice. Your income will probably go up by more than the premium at least on a dollar basis, but perhaps not a per a percent basis.
But don’t get suckered into just comparing the monthly cost for 2021 and stop. You overpay in the early years of Level Term for the privilege of underpaying in the later years, which is worth something.
Back in the day, we saw really great savings by automating a significant portion (I think around 35% of applications) of our individual health underwriting. We found that UWs spent a non-trivial amount of time questioning very benign things (like a 7 day antibiotic taken three years ago) that resulted in no action but significantly increased the not taken rate on our product. So we were able to decrease our risk profile by like 20% by having, in part, a higher acceptance rate. We did miss the occasional applicant who lied about something unrelated that was later uncovered in a medical records review but the vast majority of those cases could be rescinded. Our highest MLR and rescinding rate was for people who provided a “clean app” and had no hits in the other sources that we used for verification. You can’t do much to catch that type of liar anyway without very intense effort that simply wasn’t worth it on the front end.
Well my youngest will be 0 in a month, so arguably I don’t really need it in ~20 years when I’ll be 50 and things start to get pricier. I’m guessing the rates through work will tend to be better than individually if I got it outside of work, similar to health?
It’s not exactly the same though. Here’s a hypothetical. Suppose Sally had a physical with her GP 6 months ago and she was perfectly healthy.
Then she had unprotected sex 1 month ago. Last week the guy calls and says he just learned he’s HIV+. She goes to one of those anonymous testing places and… oh shit. She’s HIV+ too now.
If Sally, who is now fully aware that she’s HIV+, tries to buy a FUW policy she’s out of luck. (Heck, she’d be out of luck even if she had absolutely no idea she was HIV+… either way it will be caught when they do the blood test.)
But Sally can now get an AUW policy no problem. Her HIV status is not (yet) in any of her medical records. She’s never taken any drugs for it, so it won’t be in her Rx records (yet) either. Sally has a window where she can easily select against the insurance company and get a policy. And they’ll never be able to prove that she knew she was HIV+ when she took out the policy, even though she actually did know. They probably can’t even prove that she actually was HIV+, let alone that she knew she was.
So no, there’s a lot more difference than who is drawing the blood and the urine.
It depends on how healthy you are and your industry.
The underwriting that happens on a group level is basically looking at your age and type of work employees at your employer perform. They know that you’re healthy enough to show up to work every day and they have experience data on people working for your employer. Is your personal mortality better or worse than that? Are you healthier or sicker than your co-workers? (All of them… not just the actuaries but the folks in the mailroom and in the claims and underwriting departments too).
The overhead costs are often (but not always) lower on a group policy, so it could definitely be your best bet. This is probably true more often than not, but it wasn’t when I was looking for a policy.
If you happen to work for a company that sells individual life (even if you don’t work in that area) do they offer an employee discount? That might trump everything else.
I’m somewhat new to thinking about this, but I’m mainly accounting for replacement of my income (helped by SS survivor benefit and some savings) plus cost of college education for four kids. While at 19 I’m sure they’ll still be somewhat dependent at least if college is fully paid, house is fully paid and there’s something of a nest egg (especially since by then I’d have additional savings from 31 to ~50) then it wouldn’t be as big a deal. Especially since by then I would have hopefully accumulated all the college money in 529s anyway.
Nobody said you were “wrong”, I’m just trying to help you out and let you know that your definition of SI is no longer accurate. The NAIC and NYDFS don’t use that definition when they split and collect mortality data (FAU, TSI).
But go ahead and keep using it if it works for you. I’m not hear to argue, just trying to help you.
Nope. In the us, after two years they have to pay I think.
In Canada after two years they can get out of it for fraud. Answering a question like that would mean they’d claim fraud. Which means the contract was never in place to start with, so manner of death is irrelevant.
The fraud thing is a small but very consequential difference between Canadian and US life contracts. And my laymen’s understanding is that fraud isn’t what consumers think in this case. It’s more like 'the information is incorrect. Whether it was deliberate doesn’t matter. Whether the consumer even knew about it is also doesn’t matter. Unbelievable but true in practice.
I saw a case where a claim was denied after two years. Guy goes to Dr. Dr Says go home, don’t be a big baby. Then Dr makes a note in the margin, if they come back, check for something else.
Guy later buys a simplified issue policy and answers all questions truthfully to the best of their knowledge. Sometime later, symptoms return and they pass away, after two years.
Company pulls an aps, sees the note, and denies the claim due to fraud.
I had a personal insurance claim that sort of touched on this practice. I’m in the midst of a personal lawsuit over it. I have credible reason to expect its going to turn into a class action lawsuit once I win my case. And I’m going to win my case.
It seems like both the US and Canada have it wrong, IMO. Your example of the doctor making a note in his chart and not telling the patient is absurd. You could literally never know that you actually had insurance because you don’t know what you don’t know.
But similarly, in the US you can flat out lie about a lot of stuff that has lasting relevance, and if you can survive 730 days then it doesn’t matter. It is possible for an insurer to get out of paying a claim after two years if there is just super blatant fraud, but it has to be really bad.
Somewhere between those extremes is a more reasonable ground.
Thanks for the explanation. It appears that there is a difference between the two countries.
The example you use is just wrong. Not in a “you misunderstand this” way but in a moral way. A typical person would look at that and say that in no way did Guy lie and now the insurance company is finding every excuse not to live up to their promises. What a bunch of lowlifes.
It’s wrong, but understandable. This is driven by the corporate lawyers IMO. It’s not about what’s right, it’s about what is legal. And this practice is entirely legal.
And arguably (not my opinion), there’s an onus on the company to keep claims costs down by challenging claims that can be legally denied. I believe (without evidence) that these practices have become more commonplace in Canada over recent years/last couple of decades.
LTD claims may be worse. When I filed my claim, I contracted with an insurance-specialising paralegal for the paperwork. He spent the first twenty minutes blasting me over treatment of consumers by life companies over LTD claims. His experience was that life companies would deny claims almost arbitrarily. Consumers would be left financially bankrupt, lose their houses, have their marriages break up over the stress, and ruin entire families. Then two years later, on the steps of the courthouse, they’d offer payment for the last two years. Then, start the same thing all over again.
Where’s the drawback to the companies that do this? There isn’t any. Best case, tons of money saved on claims. Worst case, the lawyers do some work.
I tell you what though, corporate lawyers don’t like it when you refer to a confidentially agreement as a ‘gag order’. lol.
I am very surprised by this, although your comments are consistent with other posters’ comments.
At retirement, my uncle turned most of his 401k into an annuity with some life insurance company. He is a diabetic and a former (not currently) heavy smoker.
His money buys him no more than the healthiest applicants? So the life insurance company just gets to keep the extra profits when the less healthy people live to their shorter-than-perfect-health life expectancies?
Do annuity prices differ for males/females? I might assume not on the hunch that since generally women live longer than men, they should get a higher price:monthly payment ratio and it would be unlawful to charge women more? Is that right?
From what I recall, and it’s been 6 years since I worked for a life/annuity company in the U.S., so take my memory as potentially rusty.
There are life and certain policies so that you can get a defined number of years of payout. They reduce the benefit because of the certain period that ignores mortality, but they don’t do anything with an annuitants personal circumstances at all, it’s just tables.
Women do get paid differently, because they’re on a female table. So do couples, because generally they live longer also. Women should look at employer annuity options because those are required (grain of salt, verify) to be gender neutral.
Men and women priced differently, no distinction on health. Your uncle probably would’ve been better off with a fixed income investment portfolio (or deferred annuity) and a conservative withdrawal rate.
