What is Underwriting? How Does Current Health Impact Ability to Obtain Long-Term Care Insurance?

LTC Insurance is medically underwritten. What this means is you must have reasonably good health to obtain coverage. You cannot already need care, for example, and get insurance. 

Insurance is the management of "risk." Specific health, mental, and physical conditions make it difficult or impossible to obtain a Long-Term Care Insurance policy. Remember, LTC Insurance is guaranteed renewable by law. This means that once an insurance company issues a policy, they can never cancel it as long as you had paid the premium. It does not matter what changes in your health have occurred or how old you become. Since the risk of needing long-term health care is high to start with, insurance companies pay close attention to several factors.

Your Age When You Apply for Coverage

Most people purchase Long-Term Care Insurance in their 40s or 50s. The cost of a policy is based, in part, on your age at the time of application. However, once you get past age 75, some companies stop offering new coverage. Very few companies will offer new coverage after age 79.

Just because an insurance company will consider an older person, it doesn't mean they will issue a new policy. There would be few people in these older age groups that would meet underwriting standards.

Some companies will not consider new applicants at young ages. Many companies require you to be at least age 40, although a few will consider new coverage at younger ages. 

A qualified Long-Term Care Insurance specialist, who works with the major companies, will determine how many, if any, companies will consider you at your age. 

Your Current and Past Health History

Insurance company underwriters will carefully evaluate your current health. Every company has several "knockout" questions that immediately prevent you from even applying for a policy.

First, you cannot already need or be receiving long-term health care. You would automatically be uninsurable. Other health problems that would be automatic knockouts include, but are not limited to:

  • Alzheimer's Disease/dementia
  • Amyotrophic Lateral Sclerosis
  • Cerebral Atrophy
  • Cerebral Palsy
  • Cirrhosis of the Liver
  • Current Cancer
  • Cystic Fibrosis
  • Huntington's Disease
  • Kidney Disease requiring dialysis
  • Metastatic Cancer
  • Mobility issues
  • Multiple Myeloma
  • Multiple Sclerosis
  • Muscular Dystrophy
  • Myasthenia Gravis
  • Oxygen use
  • Paralysis/Spinal Cord Injury
  • Parkinson's Disease
  • Schizophrenia
  • Scleroderma
  • Stroke with limitations
  • Systemic Lupus
  • Type 1 Diabetes or uncontrolled type 2 diabetes 

Keep in mind this is not a complete list and varies depending on the individual insurance company guidelines. Traditional Long-Term Care Insurance and Hybrid Life/Long-Term Care combo policies will be more conservative, in general. 

Hybrid Annuity/Long-Term Care and limited duration/short-term products will have broader guidelines. However, if you need care or are expected to need care soon, you will not be able to obtain coverage. 

Underwriting Process

The underwriting process will generally include:

  • health questions on applications
  • telephone or in-person nurse interview
  • cognitive assessment (primarily for those age 60 and older)
  • medical records, including review of current lab work
  • review of medication history
  • height/weight guidelines
  • review of pending medical procedures

Every insurance company is looking for "stability." They will see if any other condition you do have is under control and stable within their guidelines. There are usually waiting periods following many surgeries or procedures. Usually, following a diagnosis, they also will want a stability period following the diagnosis. Even a change of medication or dosage will fall into a waiting period. Although waiting periods vary from a few months to years, depending on the condition or surgery.

Drug and alcohol abuse will also be considered in the underwriting process. 

If you have not had a doctor's check-up with lab work within the past two years, it may be required. Some insurance companies may order blood work or even a paramed exam. A paramed exam is an exam done by a medical professional to gather data about your medical history and current medical status. Often, they will take vitals and obtain blood and urine.  

Your Family History is Important

Today, many insurance companies will consider some family history as part of their underwriting process. Generally, they will be concerned with only your blood-related parents and siblings. 

Alzheimer's and dementia history is a common health issue that can adversely impact your ability to obtain a preferred rate or even get coverage at all. It could impact your ability to obtain "preferred rates" or even be a reason to deny your application. 

Again, every insurance company has its own guidelines. A qualified Long-Term Care Insurance specialist will be able to review your health and family history to find the company that best matches your history.

If an insurance agent or financial advisor does not ask many detailed health questions and family history questions, you should seek another professional. Any quotes provided to you would probably not be accurate.

Just answering the questions on an application is generally not enough. A specialist will get much more detailed to help you find the right company and give you an accurate quote, along with their professional recommendations.

Underwriting Process

The underwriting process starts with an application. Most insurance companies will use an electronic application instead of a paper application. There will be several questions about your health in addition to basic information and your state's suitability financial questions. 

Your information is confidential. 

Insurance companies will obtain medical records, prescription drug histories, lab work, and Medical Information Bureau information. 

Underwriters will review this information, along with the information obtained from the nurse interview.

A telephone interview with a nurse is a significant part of the underwriting process. In some cases, they will complete a face-to-face assessment. A nurse will visit with you in your home and complete a detailed health and lifestyle assessment, although they will generally not take blood or urine samples. In many cases, they may take your blood pressure and weigh you.

Rate Classes

Insurance companies typically have several "rate classes" that are based on their underwriting standards. Generally, these fall into preferred, standard, or substandard. Insurance companies will sometimes use other terms. 

Insurance agents or financial advisors, especially inexperienced ones, will often "quote" based on the last expensive preferred rate. If they approve the application, the underwriter will use the appropriate rate class based on your health. 

What this means is your "approved premium" could be different than what was quoted. While you can change benefits after issue - the changed premium could mean you pay more for your policy. This is another reason to use an experienced Long-Term Care Insurance specialist who works with the major companies and asks you many detailed questions about your health and family history. However, it also requires you to answer those questions thoroughly and honestly. 

Declined Applications/Appeals

If they decline your application, it could hurt your ability to get other coverage since some companies will not consider a person turned down by another company. On occasion, a specialist can get around this rule, but it makes it more difficult. 

On occasion, there are errors in medical records. You can appeal a decision by providing updated information to the insurance company.  

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