Heading into 2017, my wife and I were discussing our finances. We came across our life insurance policies we bought years ago when we first got married. We started talking about getting additional life insurance since our current policies expire in a few years.
This got me thinking – I’ve got atrial fibrillation! Will I even be able to get life insurance? And if I can, will I pay an arm and a leg for it? These questions led me to do some research on the topic and I stumbled upon a company called JRC Insurance Group of San Diego, CA.
I interviewed Cliff Pendell, the VP of Operations for the company. We talked about life insurance and how it impacts those who have been diagnosed with afib. Here is a video of the interview and the transcript follows it. Enjoy!
Transcript of the interview:
Travis: Today I’m joined by Cliff Kendall, the VP of Operations and one of the co-founders of JRC Insurance Group, which is a life insurance agency located in San Diego, California. Cliff specializes in helping high-risk clients find the most affordable life insurance options available to them. Thanks, Cliff, for taking the time to talk to me today.
Cliff: Of course.
Travis: Cliff, before we dive into the AFib specific questions as it pertains to life insurance, I just want to take a step back, if we can, and just talk about life insurance in general for people that might not be all that familiar with it. With that, what are the different types of life insurance policies that are available and can you briefly explain each one?
Cliff: Absolutely. There’s four really common types of life insurance; the most common is what’s called term life insurance. Term life insurance, basically, allows you to lock in a set amount of coverage for a set amount of time. Usually, with term life insurance, it’s sold in five-year increments and typical term links are 10, 15, 20, 25, and 30 years. Typically, the way that works is, if something happens to you during that period of time, there’s guaranteed coverage there for your loved ones, your family, your business partners, whoever you set up the policy for.
Whole life insurance is another form of insurance. Basically, it’s designed to lock in coverage for your entire life, but typically, whole life insurance policies are reserved at $50,000 of coverage or less. Primarily, they are purchased for burial expenses, final expenses, anything like that. Now, in whole life insurance, there’s another type of insurance, which is also considered whole life but it’s a little bit different; that’s what’s called guaranteed issue life insurance. Traditional whole life insurance, basically, they’re going to evaluate your health, they’re going to take a look at your medical records, they want to do their due diligence to make sure you’re insurable. With guaranteed issue life, however, there’s no health questions, there’s no health exam. Basically, anybody that qualifies for the policy can purchase it. The only caveat with guaranteed issue life insurance is, because they’re willing to accept anybody regardless of their health, they limit your coverage amount to 25,000 and there’s what’s called a two year waiting period. What that means is that, during the first two years of that policy, you’re not going to be fully covered; your beneficiaries will only be entitled to all the money you’ve paid into the policy plus 10% interest. After that two year qualifying period or waiting period is up, at that point, you’re fully covered for the face amount of the policy.
The last type of policy we see a lot is what’s called universal life. Universal life, there’s two types of universal life insurance; there is universal life insurance that has an investment value built into it and there’s universal life insurance that does not have an investment value built into it. Those are the most common [inaudible 00:04:00] policies on the market just because your life insurance is tied into either the stock market or an index. What happens is sometimes those policies perform well, but more often than not, they don’t so we tend to tell people to stay away from those policies. However, the guaranteed universal life insurance works just like a term policy except you can lock in your coverage until the age of 90, 95, 100, or later. The only difference there is, of course, no investment value, your premiums are fixed just like a term policy, the amount of coverage you have and the costs of your coverage doesn’t change.
Travis: Okay. Is it safe to assume the term life policies, I assume, are probably the most popular, right? When people think life insurance, that’s probably what they’re thinking. Is that correct?
Cliff: Yes. Term life insurance is definitely the most popular.
Travis: Okay, all right. Within these policies, my understanding is there’s different rate classes, which determine, ultimately, what you’re going to pay. Is that correct?
Cliff: Yeah, that’s 100% correct. Most companies have anywhere from 12 to 16 different rate categories.
Travis: Wow, okay. Of course, what determines what class you’re in, obviously, determines your health, which is kind of the topic of our discussion today, correct?
Cliff: Yes. It’s based off of health and lifestyle and what I mean by lifestyle is, if you have a dangerous job, it might preclude you from getting some of the best rate categories.
Travis: Okay, all right. Are these policies typically paid up front, yearly, monthly? And did you get any kind of discount if you pay every year versus monthly? How does that work? Just a quick overview of that.
Cliff: Absolutely. You can pay your policy monthly, quarterly, semiannually, or once a year; monthly is the most expensive. If you pay it on a semiannual basis, most companies give you about a 2-4% discount on your premiums. If you pay it once a year, most companies will discount at about 4-8%.
Travis: Okay. Then, just in general, men do pay more for life insurance than women, is that correct?
Cliff: Absolutely. It’s all based off of lifetime expectancy and, being that women live longer than men do, they pay less for their life insurance.
Travis: Okay, all right. You’re talking to someone that has AFib, and I have to be honest with you, the reason this topic came up is because I locked into a term policy many years ago, when my wife and I first got married, and the policy is actually going to be coming due here in a few years. I was sitting down with our financial advisor and we were talking about life insurance, and it dawned on me, “Oh, crap, I’ve got AFib. I don’t even know if I’m going to qualify for insurance.” The first question I have is, if someone has AFib, is it safe for them to automatically assume, as I did, that, A, they’re not going to qualify or, if they do, they’re going to just absolutely pay through the nose for it? Are these correct assumptions or not?
Cliff: No, definitely not. We’ve actually had success getting a lot of our clients with atrial fibrillation affordable life insurance. There’s 1400 life insurance companies in the nation; every company has its own specialties in terms of the type of clients they’re most lenient with approving. Believe it or not, there are a handful of companies that actually specialize with applicants who have atrial fibrillation.
Travis: Wow, okay. These questions are pertaining to someone who has AFib, does an AFibber’s age and when they were diagnosed affect the rate class that they will be put into and, ultimately, what they’ll pay?
Cliff: Yeah, it does actually. The life insurance companies prefer to see that your atrial fibrillation was diagnosed before the age of 60 and, for whatever reason, they’re more lenient in that situation. Part of it is because they have a longer period of time to evaluate your treatment and whether or not the treatment is working, but also, as we get older, we tend to have other health risks as well that go hand-in-hand. You probably know AFib may increase your chances of having blood clots. As we get older and we become less active, those situations tend to show up more often than not. Believe it or not, the younger you are when you were diagnosed, in general, the more leniency the companies are with the approvals.
Travis: Okay. What about AFib treatments, as far as the rate classes that you will qualify for and the amount you pay, and specifically, there’s two primary treatment options for AFibbers; there’s drug treatments and then there’s procedural treatments like ablations and surgeries. Do insurance companies look at these treatment options differently or do they look at it as all the same, as being just a treatment and, as long as you’re AFib is being managed, they don’t really care what you’re using for treatment? Or do they look at, “We prefer to see ablation treatments versus drug treatments,”? How does that all [inaudible 00:09:17] out here?
Cliff: The insurance company, all they want to see is whatever treatment option you’re using is working. Whether you’re AFib is controlled with a medication or if you have a procedure done, the bottom line is whether or not it worked. If you look at it from a standpoint of blood pressure medication, for example, most insurance companies don’t care if you’re on a blood pressure medication or not. They just want to make sure that, with that medication or with the treatment, your blood pressure is in the normal range. Atrial fibrillation works the same way. If you have a procedure done or you take a medication, as long as you’re following your doctor’s advice and the treatment is successful, the insurance companies are going to look at it the same; it’s, essentially, a resolved condition.
Travis: Okay. Now the obvious question I have is how do they define success? For example, if someone is taking drugs, they might go from having, let’s say, AFib episodes once a month to once a year. Same thing with someone that’s had an ablation. Maybe before the ablation, they were having episodes, let’s just say weekly, monthly, and now they have one once a year. Will insurance companies… Do they actually take into consideration the amount of episodes you’re having and then they say, “This guy, he only has one episode a year, so we consider that a success”? How do they look at that?
Cliff: You’re absolutely correct. They look at the frequency of episodes; the more successful the treatment is, theoretically, the less episodes you’ll have. That’s another reason why the insurance companies prefer to see that you’ve had tests performed with your doctor to evaluate the condition of your heart. Usually, they will prefer an ECG or an echocardiogram. Basically, that just allows them to refer to the baseline and see if you’ve had any changes over time. As long as you’re having follow-ups with your doctor and, like you said, you’re having an episode maybe once a year or less, that’s what the insurance companies prefer to see. The other things they look into is if you have any symptoms. A big red flag to the insurance companies are people who have chest palpitations or chest pain. Generally, in that case, a treatment wasn’t successful. As long as you’re not having any serious side effects like that and you’re following up with your doctor periodically, if the frequency of your atrial fibrillation episodes is annual or less, that’s what insurance companies want to see. To them, that means that the treatment was successful.
Travis: Okay. Now you brought up a great topic, and leads me right into my next question, is this whole topic about palpitations because it’s very common for AFibbers even after treatments, particularly with ablations, to have palpitations like PVCs or PACs. I, myself, suffer from PVCs and PACs kind of quite frequently on and off throughout the year, but I don’t have AFib. If an insurance company looks at me… I don’t have AFib, in this sense the ablation was a success, but, “Man, this guy has got a lot of PVCs and PACs,” but, by the way, my cardiologist says they’re totally benign because I’ve had the heart monitors done and even, though I’m having more than a normal person has, my doctor says they are benign. Does the life insurance company take that into consideration then or do they say, “We don’t really care what your cardiologist says. You’re having a lot of PVCs and PACs. We’re nervous about this so we are going to bump you into a lower rate class”? How does that work?
Cliff: It can work that way. Basically, what they want to see… When the AFib is basically resolved and the only underlying issue, at that point, is the palpitations, they’re going to underwrite you as if you’re only symptom is palpitations. They actually have their own underwriting guidelines for that. It’s that combination of things, though, that tends to cause insurance companies to shy away. What I mean by that is, if you have underlying heart disease, palpitations, atrial fibrillation, and, let’s say, diabetes, that’s where they start to say, “There’s too many issues going on here.” But, if it’s just one issue, typically, they’ll just rate for that issue. It may cause you to fall into a standard or substandard category, but in that situation, they’re going to look at the overall individual and their overall health rather than just singling them out. Most insurance companies will try to find any way they can to approve an applicant, so they’re always looking for, “Is this applicant overall healthy? Do have any other health issues going on? Do they have a healthy lifestyle?” Most of the time, when all of this issues check out, they’re going to find a way to approve your policy, but it’s the applicants that we struggle with that have multiple compounding health issues, that don’t have a healthy lifestyle, those are the ones that we tend to have the most problems getting insurance for.
Travis: Okay. In general, do AFibbers… Even if you qualify for one of these higher classes… Let me ask you this. Is it possible, then, for someone with AFib to qualify for the same high class rate as a totally normal person? Is that possible or does someone with AFib automatically… The 14 or 16 classes that you said that these insurance companies have, just the fact that you have AFib, you’ll never get the absolute best rate, but we can get you a pretty good rate. Is that correct or not?
Cliff: No, there are some situations where people with atrial fibrillation can get the top rate class. Paroxysmal AFib is one of the ones where we see that happen quite often. That’s usually where someone has less than five episodes a year and the episodes resolve themselves within a day or two with or without medication. In that situation, the insurance companies are pretty lenient and we’ve seen clients get approved at preferred best rates. The other one that we see that comes back quite often with preferred best rate is actually lone atrial fibrillation, and that’s when you’ve just had one episode, a one-off episode. If it’s persistent or ongoing, that’s when the insurance company is going to take a closer look at your overall health. In that situation, most of the time, we see standard rates at best.
Just to put it in perspective for you, standard is considered the fourth best rate category. That’s basically saying you are in average health for someone your age. The preferred best, it’s usually 5-8% of the population qualifies for it. We used to joke that Olympic athletes were the ones that could qualify for it but, ironically, it’s much more difficult than that. They don’t want to see any unfavorable family history, they want to you to be well within the weight guidelines. It’s not common for someone to get in a preferred or preferred best rate class. It is possible, but it doesn’t happen very often. Standard’s usually where most clients get approved, and that’s what they consider it the average rate category. Most people with resolved or treated atrial fibrillation, they’ll fall into that category. In some situations, you may end up in a substandard rate category, and that’s basically what… The way they look at that is they do standard and they will sign a table rate. After preferred best, preferred standard plus, and standard, there’s the substandard categories, and that’s where somebody may be standard table 2 or standard table 4. What they’re saying is that you’re in the sixth or eighth best health category out of 16. If you look at the grand scheme of things, you’re still in the top 50%, but it’s all relative.
Travis: Sure. What is the premium bump that you pay going from the standard to the substandard classes? Is it, in general, you’re going to pay 20% more? I know it’s going to vary from person-to-person, but just in general, what kind of a jump is it? Is it like you’re going to pay 50% increase when you jump down to the subclasses? What is the general increase?
Cliff: Each subcategory after standard will increase your rates about 20-25%. If you came back as, let’s say, a table 2, which is pretty common, that’s 6 out of 16 on risk, you’ll probably pay about 40-50% more than someone who’s in average or standard health would pay.
Travis: All right. Just in general… This conversation actually gives me hope. I’m hopeful now that I’m going to be able to actually qualify for life insurance. What type of AFibber is going to have the most difficult chance of getting affordable, and I want to stress the word affordable, insurance life insurance? Is it the guy that’s 70 years old and has had persistent AFib for years? It’s probably pretty obvious, but just in general, what kind of AFibber is going to have the most uphill battle?
Cliff: The older applicants that we receive that have compounding health issues, they are usually the ones that we struggle with the most. When you said affordable, after the age of 50, life insurance rates increase about 12-15% per year. You take a look at the age, keep in mind these insurance companies are basing this off of your mortality risk. Somebody that’s in the 70s that has AFib is more likely to have an issue than somebody in their 40s or 50s. Because of that, people past the age of 60 tend to pay the most for their life insurance, and those are also the clients that we have a harder time getting approvals for.
With that being said, though, we’ve seen it all here. Between myself and my business partners, we have about 60 collective years of life insurance experience, and we have literally worked with thousands of clients. We’ve seen it all. We’ve seen situations where it didn’t seem likely that the applicant would get insured and they did, and we’ve seen situations where maybe this applicant should have been insured. In that situation, if it happens where we think there’s a chance that the company will pick up this applicant, we will re-shop for them until we find a company that can provide them some form of insurance. If the term options don’t exist and we can’t find any affordable options at that point, usually we’ll recommend what’s called the guaranteed issue policy that I explained to you earlier. In some situations, that’s the best case. But I can’t say we’ve had, probably, roughly, 70-80% success rates with getting applicants with atrial fibrillation approved even when they have compounding issues like diabetes or a history of heart problems.
Travis: Wow, that’s awesome. I want to circle back here to treatments and drugs for just a minute. What about blood thinners? A lot of AFibbers have to take blood thinners in addition to any kind of antiarrhythmic drugs that they have to take to control the actual heart pumping action. Do life insurance companies look differently or unfavorably to people that are also on blood thinners as being high risk or doesn’t that matter?
Cliff: The blood thinners, like Coumadin, Plavix, Warfarin, the insurance companies, in that situation, will usually assign what’s called a standard table 2 rate, which is basically the sixth best rate category. Although the blood thinners will help prevent the chances of having a heart attack or a stroke because they prevent blood clots, there’s also some other issues that go along with taking a blood thinner. Some of those risks, like internal bleeding if somebody falls, that’s what the insurance company is looking at. Typically, if you’re on a blood thinner for atrial fibrillation, you can expect to probably see the sixth rate category in that situation.
Travis: Okay. And that probably applies, too, with the newer blood thinners like Eliquis, and Pradaxa, and Xarelto. Those are considered… Some people say they’re safer, you don’t have regular testing like you do with Coumadin or Warfarin, but I would assume that a blood thinner is a blood thinner in the eyes of a life insurance company, so if you’re on any of these long-term, that’s probably going to affect where you end up as far as your class rate. Is that correct?
Cliff: That’s kind of a tricky question to answer, to be honest with you, because the insurance companies are always reevaluating situations. If a new drug comes out and it doesn’t have the same health risk that one of the older, traditional blood thinners, like warfarin or Coumadin, have, the insurance companies will adjust their rates. It’s possible that, in the future, we could see people getting approved at standard rates or maybe even standard plus rates if they’re taking a blood thinner that doesn’t present any of the challenges that some of the traditional blood thinners do. For the time being, though, I haven’t seen anybody come back better than a substandard rate when they’re on a blood thinner, but that’s not to say that won’t change in the future.
Travis: Okay. Again, do they also take into account how long you’re on the blood thinner? Someone might just be on it temporarily because they’ve just had an ablation; a lot of times, people have to be a blood thinner for a short period of time after an ablation. I would assume that life insurance companies, as it pertains to blood thinners, they’re looking at more of a long-term thing. Someone that’s going to be on these things forever versus maybe three months. They take that into consideration, is that correct?
Cliff: Yeah, absolutely. In that situation, and when someone has had stents placed or any type of angioplasty, bypass surgery, it’s the same idea there. Once the applicant is no longer taking the blood thinner, the insurance companies aren’t going to hold it against them.
Travis: Okay. And all of this is predicated on your medical records, correct? And I ask specifically when we’re talking about number of episodes because a lot of people that have AFib, the doctor doesn’t really know how many episodes precisely they have. I might have multiple episodes, but I might only tell my doctor that I’ve had a couple, so he might not… He might not even document that I’ve had any; he might just say, “Patient presents some episodes,” or whatever. But this is all predicated on your actual, official medical records, correct? If I’m having multiple episodes but my doctor is only recording that I’ve had two, the life insurance companies are doing this based on your actual medical records. Or do they actually interview you as an applicant and they just expect you to be honest about that? I’m just curious.
Cliff: Yeah. When you apply for life insurance, the insurance company will have some basic questions that they ask you about your situation and how often you have episodes. Typically, the only time that… You’re correct. Typically, the only time that a doctor would know about an episode is if it required hospitalization or if it required treatment other than what your normal treatment is. In that situation, they basically rely on you to be honest and let them know how often it occurs unless, of course, something in your medical records shows this applicant has been hospitalized four or five times in the last year for this situation. Other than that, they’re just relying on your honesty.
Travis: And, finally, with the application process, can you give me an overview of what’s entailed? Because, in my mind, I’m thinking, and I don’t remember, it’s been so long; it’s been 20 years ago since I had to apply for my term life insurance policy. I just remember the time because I was very young; I was in my 20s and I was in perfect health at the time. Gosh, it seemed to me like I just filled out a simple application. I’m sure there was more to it than that, but as someone with AFib, particularly if you’re an older person, you’ve had all kinds of treatments and you’ve been in the hospital, what is the application process? Do the life insurance companies make you go in for a really in-depth physical? Do they require you to go get an echo? What’s all involved?
Cliff: When you apply for life insurance, what will happen is, when you work with your agent, they will do a brief phone interview with you to figure out which company is your best match. That’s assuming, of course, you’re going to a broker. Once they’ve determined who your best match is, what we’ll do is we’ll set you up with a basic application, we get your information like your beneficiaries, your address, just basic information like that, occupation. From there, that application is sent over to an application processor, who is basically going to give you a call, do a brief phone interview with you and set up a time for a free medical exam. The medical exam is paid for by the life insurance company; someone will come out to your house unless you prefer to go into one of their offices. At that time, they will typically check your weight, your height, they’ll take a small blood and urine sample, and they may ask you a few additional questions about any treatments you’re having or any medications you’re on.
In some situations, if you’re applying for more than $500,000 of coverage, they will request an echocardiogram, but very few companies do that; we see it more often above $1 million of coverage. Usually what they’re referring to is just what’s in your medical records, and that’s why the insurance companies prefer to see that you’ve had an echocardiogram done in the last three years. They just want to make sure that you’re keeping up with what your doctor is asking you to do. But you’re not responsible for getting any of those medical records yourself. The insurance company, when you apply, they will actually use what’s called Medical Information Bureau, and that’s basically all of your medical records, anytime you’ve applied for insurance before, they’ll pull that information and any records from your doctors that are pertinent to your condition. Once the insurance company has all that information, an underwriter will be assigned to your case and they’ll review all of it and determine what your risk is. Essentially, for an applicant, it’s a pretty easy process, it’s basically two phone calls and a 15 to 20-minute in-home exam.
Travis: Okay. From the time we have that initial phone interview that you mentioned to the time that I find out what I qualify for, how long is that time period? Is it a month? A couple of weeks? What is it usually?
Cliff: Usually, 4 to 8 weeks. The reason for the delay is it’s not the insurance company, it’s actually the doctor’s offices. Because, when the insurance company requests records, most doctors will take 10 to 12 days to send them back. Once they have a chance to retrieve all records and evaluate them, that’s where that timeframe comes into play. In most situations, we do see delays with medical records, especially with applicants who have multiple doctors, who’ve lived in multiple states, we do see delays a lot with applicants who get most of their treatment from the VA hospital. For whatever reason, the VA tends to be very slow with releasing medical records, but by and large, I would say 4 to 8 weeks is what it would take to get an approval.
Travis: And, of course, if anything changes in that time period, I suppose you are obligated to notify the insurance company or your broker and say, “Since we started this process, I’ve been hospitalized with another episode,” or whatever. I would assume it’s just… It’s put on the applicant to be forthright with any changes during that period. Is the correct?
Cliff: Yeah. When the final approval for the policy occurs and the policy is mailed out to you, there’s a few forms they have you sign. One of those forms basically says that you haven’t had any health changes since you initially applied. If you do have a health issue, sometimes they’ll take it into account depending on how serious it was. I’ve had clients, in the middle of the application process, that have broken a bone, let’s say. That’s not going to be a concern to the insurance company, but if something serious came up, obviously, it could affect your approval or your rates.
Travis: Okay, alright. Wrapping all of this up then, what are the most important takeaways for someone with AFib? It sounds like, based on our conversation here, that you would want to apply… If you haven’t applied for life insurance, obviously, apply for life insurance before you are diagnosed with AFib, but once you’re diagnosed with AFib, it’s probably the best thing to do is apply for life insurance sooner than later. Is that correct? Or would you even advise, if you’re diagnosed with AFib, maybe wait until you actually treated and have had some success with the treatment before applying?
Cliff: That’s kind of a gray area, to be honest with you. Typically, if you apply right as you’re getting diagnosed, the insurance companies will usually approve most of those applicants at a substandard rate. As time goes on, though, if you are managing your condition, maintaining a healthy lifestyle, following your doctor’s orders, your rates will definitely improve over time. But on the flipside of that, we do see some applicants who are diagnosed with atrial fibrillation and they don’t make lifestyle changes, they don’t follow their doctor’s advice, they don’t go and get the periodic echocardiograms done, and that’s where we tend to fall into an issue where it’s harder to get insurance or the rates go up. I would say, if you are tired diagnosed with atrial fibrillation, it’s not going to hurt to apply for life insurance, but if you don’t apply right away, make sure you do stay on top of your treatment. Make sure you limit your alcohol intake, you follow your doctor’s advice, having an exercise routine, all of that stuff definitely helps in the eyes of the insurance company.
Travis: Great. I’ve got to tell you, I’m feeling a lot better about my situation. I want to just thank you for taking the time to talk with me, Cliff. If people listening to this have more questions or want more information, what’s the best way they can reach you and your company?
Cliff: We are on the web, we’re www.jrcinsurancegroup.com. We do work with 47 companies here and that does allow us to shop the market for our clients. We can also be reached by phone toll-free at 855-247-9555.
Travis: All right. Excellent, Cliff. Thanks again for your time, I really appreciate it.
Cliff: No problem. Thank you and thanks for calling.