If you have had your family's life impacted by cancer of a parent or sibling, you know all about the emotional and financial toll it can take.
What you may not know is the impact it may have on YOUR life insurance application.
If your family has a history of cancer, particularly a death before age 60 or 65, you opportunity to obtain the best health class will be significantly limited.
The purpose of this article is to give some background on how family history impacts life insurance ratings and provide the information you will need to get the best deal possible.
If that sounds like a stupid question, you need to understand it is meant in the context of life insurance underwriting,
Life insurance carriers all have different rule for how a family history affects an application
For instance, some carriers will consider your parents but not siblings. Other carriers will will not be concerned if the cancer didn't cause a death until after age 65.
So. in the context of life insurance underwriting, the answer to the question "what is a family history of cancer" is not so straight forward.
In fact, the answer is specific to the carrier underwriting the application.
So you understand that insurance companies charge more for people who have a family history that includes cancer, but think it should matter more that you are in great shape.
The good news is that there are a few carriers that agree with you, however most do not.
In spite of the fact that you may be perfectly healthy, or that your parent who got cancer smoked and lived a lifestyle that did not promote good health, insurance carries often just look at the actuarial charts.
Cancer affects about 8% of the population directly and is the second leading cause of death i the United States. the Centers for Disease Control (CDC) estimates that between 5-10% of all cancers stem from inherited genetic mutations.
The impact on your underwriting class if you have a family cancer history is also carrier specific.
Several carriers will not allow a a rate class better than standard if you have parents or siblings who succumbed to cancer prior to age 65.
This means that if you would have been "preferred plus" (best class) you'd get knocked down 2 levels to "standard". However, if you were already "standard', you would stay there and not be further penalized.
There are some carriers who are far more concerned with a history of heart disease than cancer and will flag your file for a family history of heart disease but not cancer.
While several carriers will "ding" your rating for having a family history that include cancer, none of them will require an attending physicians statement (APS) as a result.
Because the underwriting guidelines are significantly different across carriers, it is imperative that you use an independent agency like ours to get the best deal possible.
While, that may sound a little self serving , it has the benefit of being provably true.
Having access to 50+ carriers allows an independent agent flexibility that is not available to a so called "captive agent". By captive agent, I am referring to agents who work directly for a carrier and have a big financial incentive to send all of their business to that one carrier-whether it's the best fit or not.
For example Prudential Financial may have more of an appetite for the risk that Cancer presents than say Protective. In this case the underwriting grade will reflect this increased appetite.
So, if your Agent only represented one carrier and you found out later that that you could have gotten a rate 35% or 45% better, how would you feel?
You can bet that if the "home" company is not the best deal available that he'll be in no hurry to tell you that. After all, he has a mortgage to pay too.
The case study below illustrates why it is in your interest to have as many options as possible available when shopping for life insurance with a family history of cancer or any other impairment.
Gender: Male Age: 48
$250000 20 Year Term
No Known Illness ht/ wt excellent
Family history of colon cancer.i
No Other Health Concerns -marathon runner with regular physicals
This looks like a best case scenario that would be either Preferred Plus, Preferred, or Standard depending on the insurers appetite for a cancer history gout risk.. Let’s take a look at the rates.
|CARRIER||MO. PYMT||CARRIER||MO. PYMT||CARRIER||MO. PYMT|
This table which shows only a few of the major life insurance companies available illustrates the difference in rates. For standard rates Prudential is 15% more expensive than Lincoln
On it’s face this seems like a pretty straight forward choice and if underwriting grades between carriers is the same, it really can be that simple.
This kind of easy price shopping is particularly useful for younger folks in good health and demonstrates why you want to use an independent Agent.
For people who have a family history of cancer or suffer from any serious diagnosis, it gets much more complicated.
Because life insurers manage their appetite for specific risks by being more lenient or more stringent with underwriting grades, you need to know which company will grade you a "Preferred Plus" rate and which ones will grade you "Standard".
In the case above Prudential (the most expensive preferred plus r rate) is likely to be the second best deal because other than Banner, the more competitively priced carriers will likely rate the risk table Standard.
This is something you can’t know by simply looking at the lowest price. In this case using an independent agent could save you 56% (the difference between Banner @ Preferred Plus and Lincoln @ standard.
That’s a really big difference when you consider that over the life of the policy it adds up to over $7000.
Wouldn’t you rather have that money (or spend it on an elaborate vacation) , rather than pay too much for insurance because your Agent didn’t have the options or experience?
Silly question, of course you would!
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Jim Tobin is the owner of Life Insurance Help Desk, a Fairfield County, CT. life insurance agency. You can find him on LinkedIn and Facebook. Over the past 10 years, Jim has used his CFP-financial planning designation to help individuals with their life insurance needs. In addition to working with life insurance clients, Jim teaches ESL classes in his spare time. He resides with his beautiful wife Nicole and the 3 cats that rule their lives..
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