Dealing With LTC Declines

Whether you have known your clients for years or just recently met them, there is no sure way to know that they qualify for Long Term Care coverage.  Despite all the questions you ask and the pre-qualifying homework that is done, they may still get declined for LTC insurance.  Clients who appear to be the picture of good health and who are living a physically active lifestyle may have what I like to refer to as “skeletons” hiding in their medical records.

With the limited number of carrier options we have today, it is important to remember that there are differences in what is acceptable to each of their underwriting teams.  What one carrier will not, under any circumstance consider, another might.  Some may limit benefits based on health or family history while others do not.  Also, some report declines while others do not.  Deciding where to apply to try and avoid a decline is important, and sometimes, it means that the lowest premium is not the best choice for your client.

You have just been notified of your client’s decline…what do you do next?  The typical immediate reaction is denial, but once reality sets in, acceptance of the decision, though disappointing, is inevitable.  Appeals can always be filed, and must be when the client requests them, but unfortunately, they rarely generate a change in the decision.  In years past, this was not always the case, but with the wealth of knowledge of LTC claims history now firmly in hand, the carriers remaining in the brokerage industry have learned to be less forgiving.  What used to be gray is now more likely to be black and white, and exceptions are pretty much a thing of the past.   We are now operating in a “no means no” world, so it is important to know and understand what options, if any remain after a decline.

First and foremost, you must understand why the client was declined.  Was it a health issue or combination of issues?  Did the underwriter see a test or procedure that was recommended in the APS that has not yet been completed?   Is the client intentionally not complying with the physician’s instructions and/or recommendations?  Did the client fail to disclose all their health issues and medications?  Knowing as much as possible as to what was involved in the decline can help you decide what to recommend next to your client.  Generally, except in the worst cases, there are other options, though they may be more limited.

Occasionally it is just a postponement, not a full decline, so make sure you understand the wording that is used.  It may be that the client must wait until that test or procedure has been completed, or perhaps they need to wait until a period of stability has been established due to the addition of or a change in dosage for a medication.  In these cases, it may simply be a matter of circling back to the client once the required period has passed and reapplying.

In some cases, it may mean switching the declined client to a Hybrid product where underwriting involves a blend of mortality and morbidity factors.  Though not always the case, there are times that what a Traditional carrier will not accept, a Hybrid carrier will.  If Hybrid Life/LTC or Annuity/LTC is not an option, perhaps a Short Term Care or a Home Health Care policy will provide the client with some peace of mind.  Guaranteed Issue HHC is available in most states and can provide the client with limited coverage.

One of the most difficult situations are the cases where one of a couple is approved while the other was declined. 

Clients frequently react with the “if my spouse/partner can’t have a policy, then I don’t want mine either” attitude.  The clients are usually angry, offended and disappointed.  Convincing the insurable person of the couple of the importance of securing their own coverage, especially now that their spouse/partner’s expenses might have to be covered by their own assets, can be challenging.  If there is no question that the spouse/partner will not qualify for LTC, whether Traditional or Hybrid, and they are not interested in a STC or HHC policy, another answer might be Mutual of Omaha’s Spouse Security Benefit Rider.  Unfortunately, it is not available in all states, so be sure to check before discussing. This rider pays an additional 60% in benefit to the insured once he or she goes on claim without impacting the insured’s benefit pool.

Regardless of the option or combination of options the client chooses, it is important to make sure they understand that they do have options. 

Insurance Advisors will assist you in exploring these options and finding the best fit for your clients. Contact us today!

Kathy Brooks

Account Relations Manager

Insurance Advisors, Inc.