A Broker’s Perspective: Diabetes
In this and subsequent articles, I look forward to providing an overview of what you can expect from a life brokerage underwriting perspective on the issues analyzed so well by Dr. Robert Goldstone. His reviews are quite valuable, and I hope to be able to add to them by giving you an impression of what you need to provide in order to obtain the most favorable rate and premium for your prospective client.
In terms of impairments or health issues, there are very few problems more prevalent than diabetes; therefore, you should expect that most companies have had sufficient experience to develop a philosophy and an interest level in providing coverage.
Due to the widespread nature of this disease, you and your client should expect to complete a diabetes questionnaire, either from a company or, more probably, a generic questionnaire from the agency with which you are working. As with all other underwriting issues, there is simply no substitute for providing the greatest amount of information on the individual so that the underwriter obtains the clearest picture of your client. If your client shows a reasonable level of interest in his health, you should find it easy to ask the client to complete the questionnaire as fully as possible.
Since two of the most common issues affecting a disposition toward this disease are the build and lifestyle of the prospective client, these are the types of questions that can be easily answered. If the prospect is actually diagnosed with diabetes, then both the most recent blood sugar level and the Hb A1C measurement are readily known and available, as both are necessary for any treatment or monitoring. In any case, the more information you can obtain and provide, the closer your client is to receiving the most accurate quote for the desired coverage.
For example: (1) What type of diabetes are we concerned with? Is it type 1 (insulin dependent); type 2, by far the more common form of the disease (non-insulin dependent); or prediabetes (a precursor to the disease itself, usually regulated only by diet and exercise while being closely monitored). (2) How much and what type of medication or treatment has been recommended?
While the relative health of the individual is a key, the age at onset as well as the overall involvement and follow-up to this disease are essential questions to be answered in order to obtain the most favorable quote. Among other questions will be whether the proposed insured is being seen by an endocrinologist (a diabetes specialist) as well as a general practice physician, therefore speaking to the quality of care received.
In terms of what you should receive for a quote, it is not inconceivable for an otherwise healthy individual diagnosed with a form of diabetes to be quoted very favorably. Of course, many factors, such as the build of the individual, as well as the length of time that the condition has been known and treated will be necessary.
Unfortunately, we are seeing with increasing frequency that many individuals are not even aware they are diabetic until their insurance exam. In these cases, you must address this issue with the greatest of delicacy. I suggest that you consult with your life brokerage agency for the best possible approach.
Relevant Case Studies
The following four cases should give you a sense of how the very best clients have been underwritten.
While many major insurancecompanies will react similarly to certain concerns about expenses and the mathematics of how to price their products, one of the most subjective areas of pricing is the specific underwriting of an individual risk.
In short: What risks are better than others and why? Which risks will, ultimately, be profitable for the company to accept and at what rating? Of course, you should expect that any brokerage agency will be able to obtain a better risk assessment than any individual career company. Among the most obvious reasons is the wide range of choice that a BGA has available, with many quality companies competing within their portfolio for a certain type of risk. For example, while all companies will tend to treat individuals with type 1 diabetes as a more serious condition than those with type 2 diabetes (as they should), there are some that demonstrate no interest in underwriting type 1 at all.
That being said, the range of offers from various companies can and do range across many table ratings. At one company, a risk with certain impairments may be a table 8, while another company will assess that exact same risk as a table 2 (or less). If a concession is needed to reach a certain premium (for the contract to be affordable), a BGA will negotiate with the company having the most optimistic view of the client to squeeze another table or two in an effort to bring all parties together.
Of course, ultimate results will be completely dependent upon the individual’s age and health, as well as the interest level of the insurance company in insuring this disease. In each case, these individuals were non-tobacco users, which typically improves the reception for best underwriting consideration. The desired face amount in each case was $1 million or less—considered a relatively normal case size.
In the following case studies, I have given you the ultimate ratings achieved by four different types of diabetic risks. One important point for you to understand is that, in all cases, to achieve the rate needed the company was deliberately chosen.
Case 1—Pre-Diabetic Male, Age 47, with no symptoms other than reason for concern (family history and the prospect’s build), a relatively high Hb A1C
(but less than 6.4): Preferred to preferred Best (in certain cases).
Case 2—Type 1 Diabetic Male, Age 62: Low table rating (T-2).
Case 3—Type 1 Diabetic Female, Age 72: Standard (typical best for clients less than age 70).
Case 4—Type 2 Diabetic Male, Age 59: Standard (usual for this most common form of diabetes).
In all cases, a client with diabetes can be very effectively underwritten with many different companies; however, the most effective way to obtain the best
possible offer for your client, while assuring yourself of the most competitive commission with the least effort, is by working with your life brokerage agency.
GARY S. DWORKIN CLU, RHU, is founder and president of Dworkin Associates, Inc. (DAI), with offices in Rochester, NH and Naples, FL. Dworkin was one of the original members of Broker World’s advisory board and is a frequent contributor to the magazine; in fact, he wrote for the very first issue. He served as chairman of the National Association of Independent Life Brokerage Agencies in 2009 and currently serves as chair of NAILBA’s political action committee. He has the distinction of serving on NAILBA’s board of directors longer than any other member in history. Dworkin has also served in leadership roles for the National Association of Insurance and Financial Advisors–New Hampshire chapter, as well as on the board of many other industry and community organizations. In addition, Dworkin is a member of The Marketing Alliance and the Risk Appraisal Forum.
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