Discriminatory, Unfair & Bad Business

Discriminatory, Unfair & Bad Business

As an insurance professional, I have dual responsibilities. I have an obligation to my clients to help them mitigate the risks to themselves and loved ones from premature death, disabilities arising from accidents and illness during their working years and in retirement.

As an agent of insurance companies, I also have an obligation to present their products honestly and not misrepresent to them the health or mortality risk of applicants.

Sometimes these responsibilities appear to be in conflict.

Several months ago a client of mine was denied coverage for Long-Term Care insurance. He was remarkably healthy. He is still actively at work and leads a healthy lifestyle. He takes no medications and his health history is pristine. The insurance carrier denied his application because both his parent had developed some type of dementia when in their late 70s.

In the 20 plus years I have been in the insurance business, I had never before encountered a denial of coverage based solely on family history. I had asked a number of colleagues if this was something they had encountered and all said no.

Upon researching the statutes, I discovered that this would have been illegal for a health insurer, but not for Long-Term Care Insurance. I always tell my clients to be truthful on applications and interviews. But are they being penalized for being honest? Would orphans who do not know the health history of natural parents be denied? What about applicants who are not totally forthright? How would the underwriters check familial history?

On February 15th an article appeared in the NYTimes that reports how responsible and healthy gay men are being denied Long Term Care coverage because they are taking Truvada, a drug that prevents HIV. New York Will Investigate Reports of Gay Men Denied Insurance

This prophylactic treatment is recommended by the CDC. As studies conducted over several years show, people who take this drug regularly have nearly a zero chance of becoming infected. Since the insurance companies do not (yet )inquire about their sex lives, it stands to reason that many who do not practice safe sex can qualify for coverage although they ultimately pose a much greater risk to the insurers.

Insurance is all about mitigating risk for both the insurance company as well as for those seeking coverage. The above examples, however, discriminate against applicants who are honest and responsible, while the insurers are taking on the risk of applicants with unverifiable histories or habits.

POSTSCRIPT: Ultimately I was able to get coverage for the client with a family history of dementia. He was approved at the very best underwriting class.

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