Underwriting and Declines (Individual & Family)

I wanted to talk a bit about something that has come up quite a bit recently concerning declined coverage and health insurance underwriting in California.

I always maintian that, with the exception of MRMIP enrollments which require a decline, generating a decline unnecessarily is never a good idea. Many people have called me in the last few months who have been advised by another agent to submit an application for health insurance even though the health history appears to be problematic. This is never a good idea and is, truthfully, not necessary to determine within a reasonable degree the outcome of the underwriting.

We, as agents, are able to call into the carrier's underwriting departments and, anonymously request and underwriting "review" for any prospective applicant. In most cases, given a reasonably accurate history, that underwriter can tell us whether or not the application would be declined for coverage. Also, agents have an underwriting guideline for each carrier they represent and often the answer can be found there without the need to even call an underwriter. No need to expose you to a decline that will be on your record for 10 years.

Now, some will say "yes, but each carrier does its own underwriting without regard to another carrier's decision" and this is absolutely true. However, if a person is declined for coverage, for the next 5-10 years, depending on the question in an application, that person MUST indicate that he/she was declined for coverage. This will be an instant red flag to the new underwriter who will likely take a very thorough approach to the applicant. This question will appear on both individual and employer-sponsored group applications. It's a stigma that should be avoided whenever possible. Kind of like a ding on your credit rating.

Let your agent do the work up front, look at all of your options, and make your decision based on the most accurate probability, not just flinging an application into underwriting and hoping for the best.


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