How easy is the underwriting?

When a carrier launches a new Medicare supplement, and AmeriLife starts recruiting, our marketers inevitably get asked, “How easy is the underwriting?” It’s a valid question, and one not always easily understood. For Medicare supplements, medical underwriting involves a series of “knockout” health questions. Often times that’s it. The carrier is ultimately hedging a bet that their insured remain healthy, so asking about a history of heart disease or cancer makes business sense. Life insurance products usually go more in-depth; several require a full paramedical exam from a physician.

But for Medicare supplements, the health questions ask about specific conditions like diabetes, high blood pressure, past surgeries, and prescriptions. Med sup carriers also utilize a height and weight chart which may affect the customer’s premiums or exclude them from coverage.

To illustrate this, let’s look at Mutual of Omaha’s medical underwriting for their Medicare supplement products in Florida. The height and weight chart can be thought of as the first “knockout.” I am 5’11”, 210 pounds—a little overweight, but well within the parameters of 108-293 for my height. If I bulked up to 294 (which would be an impressive feat by the time I hit Medicare eligibility), I would be declined. Mutual of Omaha may also implement a rate adjustment based on intervals within the accepted height and weight parameters. For example, if I were just 13 pounds heavier, I would be in “Class I.” Per Mutual of Omaha’s application, I would still pass underwriting, but pay 10% more in premiums than someone within the “Standard” weight parameter.

The next few sections of the application require basic identification information, Medicare information, and previous and existing coverage. Pages 6 and 7 ask for health information and medications. That’s it. The bulk of Mutual of Omaha’s medical underwriting is garnered from the answers on those two pages.

If an applicant answers “yes” to any of the “knockout” questions, they are not eligible for coverage. The questionnaire asks if you’ve ever been diagnosed with diseases like Alzheimer’s or ALS or if you’ve been implanted with cardiac defibrillator. For the most part, folks are pretty knowledgeable about the major aspects of their medical history. Questions like “have you ever been advised by a medical professional to have treatment, further diagnostic evaluation, diagnostic testing, follow-up visits or any surgery that has not been performed?” are a little trickier. Trickier still is section G, which asks for medication name, dosage, frequency, and if the medication has been taken for more than 2 years.

Advise your client to answer the health questions and list their medications to the best of their ability, but don’t worry too much about inaccuracy. Carriers realize that clients might omit parts of their history or fail to list every drug they’re prescribed so they usually include an authorization section. Mutual of Omaha can request Personal Information from clients’ doctors, pharmacies, and other medical care facilities for 24 months from the date the application is signed. Personal information includes medical history, mental and physical condition, prescription drug use and even information about finances, occupation and general reputation. Mutual will use the information to resolve any incomplete, incorrect or misrepresented information. The authorization won’t be used if the applicant is in an open enrollment or guaranteed issue period. Otherwise, refusal to sign the authorization statement means the policy will not be issued.

It’s a huge plus to have options when determining a potential clients specific health needs. Some agents are fine and dandy with one or two insurance products in their holsters. They are under the impression that too many options may confuse the prospect. Presenting 80 different Medicare supplement options might be overdoing it, but 5 or 6 is more manageable and helps build trust. People can be indecisive, but give your prospects the benefit of the doubt. They’re savvier than you think.

Medicare supplement underwriting is straightforward when compared to P&C, major medical, and several life insurance products. This can make Medicare supplements an attractive sales avenue for agents who don’t want to deal with a lot of back and forth clarification with a carrier before their client is even insured. Keep in mind some carriers have fewer health questions and some are more restrictive. Contracting with a variety of carriers increases the odds that you will find insurance for your prospects with more involved medical histories.