Why Insurance Agents (and Me!) Don't Like Serving Those With Pre-Existing Conditions, Part 1

Updated: Oct 14

In my very first year as a consultant, I prospected the mother of a diabetic child who had given up on any and all forms of insurance.


Her rejection of me was extremely brutal.


Some of you guys think I am brutal. Trust me. I had nothing on this.


But I spoke to her in early 2019 as someone with more experience, and I finally got some context.


It turned out that she had spent almost a decade trying endlessly to get insurance for her child and failing. back in the 2000-2010 period. Many agents had tried and failed, or even promised but under-delivered.


This put her off the idea entirely. And she spent many years in the fear that one day the diabetes would escalate into Diabetic Complications.


And these are often the definitions for Diabetic Complications.

That really... Got to me.


People with Pre-existing conditions need a Financial Consultant the most.


They need a clear understanding as to


i) What kind of risks they are exposed to without insurance,

ii) What options they have (which become more and more limited with passing time) and

iii) A clear line of action with solutions.


That's why in 2019 - I began to execute a fairly ambitious idea called the 'CaringBliss Project.'



Why the Cold Change of Heart?


CaringBliss, which I sadly did not coin as I am bad at names, was a project that looked SPECIFICALLY at trying to get people with pre-existing conditions insurance.


It cost me a substantial amount of money, and even more time.

It was initially a design to help a Mentee brand herself more effectively. It seemed like a niche enough market and a good idea for long term prospecting.


But a lot of it... Was the heart of what I used to think Insurance was all about. See, when I first joined the industry I had no idea what Insurance was or how it worked.


I actually thought that an insurance agent's job revolved around making sure that people of every type had insurance.


But insurance is really for the healthy.


And the first part of a consultant's job before all things is to sell you on the idea that you need it, and not to spend all your time procrastinating on the decision.


So it was a painfully long half-a-year, and eventually the project came to a close.


I would be very surprised if I ever found myself attempting another such project again.


You might be thinking:


"Wow, Money Maverick. That's awful."

"Don't you think as an insurance agent, its your job?"

"Where is your compassion?"


...Hey, at least I ran a project for 6 months. It turns out that ideology, however good-intention-ed, often isn't reality.


Let me tell you some real, unfiltered reasons behind this seemingly unreasonable reasoning.

But just in case this article receives a lot of backlash, I'll start from the primary reason and add the rest in Part 2 or 3 - should there be one.


Here's the primary reason: The Financial Model is Wildly Inefficient.



Wait, I Didn't Understand That


...Actually, the model looks pretty much like how commissioned agents, but with crucial slight differences. Let's look at the process of business step by step.



Step 1: Filter Clients


Pre-existing conditions has a insanely huge range.


For the CaringBliss Project, I was looking primarily at people with chronic illnesses (e.g. Diabetes, High Blood Pressure, High Cholesterol), BMI issues or people who just got off medication/had surgeries years ago.


Most of these prospects would be applicable for a wide range of products catered to 'sub-standard' conditions, or simplified underwriting.


Unfortunately, its not easy to convey this to people who really want insurance.

Some of them will underplay their condition.

A lot of them will LIE to you, intentionally or otherwise.


Some of them will be experiencing cancer while asking if they can get insurance for it. I kid you not. And there's absolutely nothing wrong with asking, but I never like getting yelled at for asking simple questions and giving simple answers. The CaringBliss Project didn't even have any paid advertising, but I easily filtered out almost 100 people by the time the project was over.


Step 2: See a Prospect


Even when a prospect is qualified to be suitable, and you're pretty excited about the opportunity to help someone where they wouldn't have had any options just a few short years ago, it rarely goes straight forward.


The biggest problem I had during this project when seeing a prospect face to face for the first time is they lie to me all the time.


Yes, People LIE.


They underplay their conditions or their diagnoses or their medication - or don't declare they've been rejected by an insurer before or aren't currently trying to get a claim or a application done...


And I know what you're thinking: patients aren't doctors. It probably isn't intentional.


Right?


Believe me, I went into this believing that much as well. Unfortunately, people are the smartest they've ever been in all of history when it comes to insurance and medical related matters.


You ever watch a medical drama (House, Grey's Anatomy, even Scrubs) where you have huge sympathy for the patient and it turns out they're lying to their doctor? Yeah, it happens here as well.

Which makes sense, because sickly and desperate people will do what they have to in order to get the treatment they want. And I'm not in condemnation of this, actually. If it were my own family or me, I would behave the same way.


I'm just pointing out how difficult that makes it for Insurance Agents and Financial Consultants.



Step 3: Send in an Application


But let's say you've finally gotten a case where the client is perfect:


a) The client really needs your services

b) The client seems within the health parameters where a wide range of sub-standard insurance plans are available for them


You have to send in an application, which is a lengthier process than someone in good health. If you're fortunate, they happen to have updated medical records - for example, someone with diabetes needs to know their blood sugar level [measured in mg/dL].


If you're less fortunate, they don't and the client requires a lengthy medical checkup that may not even be free.


Additionally, the amount of work put into the application and ensuring all the declarations are factually correct (which any mistakes puts your license at risk) takes up a considerable amount of time.


Step 4: Receive an Outcome


If you haven't lost the client by now, you get an outcome. With any luck, its the standard rate that you applied for.

More likely, its not. 'Loading' is when the company decides to charge a higher amount to compensate for the additional risks that the applicant poses to the company.


'Exclusions' is when the company decides to exclude elements of coverage for the same price.


Or you could get rejected entirely. All of it will be revealed in the Letter of Offer.


So in any 4 scenarios - not to mention the variations of those scenarios (e.g. both loading and exclusions), the best outcome is purchasing at the price you were trying to get in the first place.


That should sound pretty sad.


Literally any other outcome is markedly unfavorable, and usually a consumer may find it too


i) Costly - Where the price point has increased to such a degree that the client would rather not have the risk transferred to an insurer


ii) Redundant - Where the cause of concern for a client is not met by an insurer.


And with this Letter of Offer comes...



Step 5: Purchase the Policy...?


Unfortunately, it turns out that most people who want insurance can't get it.


Especially the kind who will hound you, threaten you and accuse you of abandoning them after half an hour of sobbing before screaming hysterically through Facebook Messenger. [If that was an oddly specific example, that's because... It was.]


You also have the much more common flip side - which is that DESPITE the policy being catered to sub-standard or pre-existing conditions, there may STILL be some kind of additional loading or exclusions.


This is particularly prevalent for health insurance plans.


After making it from (a) to (e), the client has the option to accept or reject the Letter of Offer. And if the costs are too high, they will reject it.

As a consumer, it is perfectly within your legal right to do so.


You should never feel obligated to purchase just because your Financial Consultant has jumped through numerous hoops for you with absolutely nothing in return.


But can you see why we might not like even trying to serve a client with pre-existing conditions?

A summary of process, effort and time.

To take someone from Step 1 to Step 5, it can take several weeks to 2 months. During this time, the consultant is paid nothing. And he/she may never get paid at all.

Some Final Thoughts for Part 1 and a Personal Update


I really hope I am not coming across as a selfish and cold-hearted person. After all, I ran this project for half a year with my own money and time whenever I could.


If you want to do charity, run a project like this. But if you can't feed yourself at the same time, you need to consider your priorities.


Of course, having finally put my thoughts to paper after so long (it has been quite a few months since the end of this project, which died a quiet and unknown death), I can see how it has really affected my attitude, for better or worse. It would be good if people had insurance.


When I started this project, it was generally of the belief that insurance companies, or even insurance agents, might not be serving enough of the public's interest. But I would advise consumers to do several things:


1) Stop screwing around with your decision making. If you're really unsure, get the product first and utilize the free look period. Anyone who really believes that insurance is important will make the time to figure it out in several weeks. You can always rinse and repeat the process if you're the especially curious type.


2) Get a clear idea of your medical history even if you think you're healthy. Food poisoning, medication, a skin disease that you think is mild eczema but the doctor has a different name for it...all these things help to ensure that both you and your agent don't inadvertently commit fraud, and go through a lengthy appeal process.


3) While there has ALWAYS been a potential conflict of interest between consultants and consumers, the finalization of a product puts both of you on the same page.


If a consultant has already sold you on the concept and product and is asking you for personal things like your Financial and Medical Underwriting, its part of their due diligence process and obligation to their license given by MAS. Don't compromise both of you by declaring falsely.


4) Most importantly, remember that when you are applying for insurance - you are the applicant. The insurance company decides if they want to insure you. Paying premiums to overzealous consultants or making a wealthy company wealthier does not obligate them to give you insurance regardless of health.



I would like to thank all the consultants who participated in this project in some shape or form, especially my then-mentee, Alice. I am sorry it did not work out.


I believe that there are less cynical, larger-hearted consultants than myself. But I can only promise to do my best. As it turns out, my best has a limit.


As a CI specialist, I would advise you meticulously to consider your age, gender, family history and the potential financial risks to your future.


Hopefully before you get sick.



Money Maverick

As one of the Top Financial Bloggers in Singapore (Feedspot, Withcontent.co), I would be happy to answer any emails and questions you may have, as I have been doing for my readers over the past few years - especially about Insurance and Investing, as it is my forte of personal and professional knowledge.


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Money Maverick is a Licensed Financial Consultant with MAS, who specializes in Investments and Critical Illness Insurance.


The views on his blog are strictly of his own opinion and have no affiliation to any of the companies he works with.


Here are some of my resources on:


1) Investing: Why you should invest aggressively NOW (and how you still can have peace of mind)


2) Insurance: The Newest, Rising Critical Illnesses in Singapore (2019)


3) Retirement and Leverage: Leveraging a Private Annuity, Pros and Cons (ft. Jamus Lim)


4) Spending and Saving: The Biggest Spending Mistakes You DIDNT Even Know you were Making (and how to avoid them)


5) Job Assessment: A Case Study on How a $6k/mth GIrl makes MUCH more money than a $10k/mth Guy


6) Financial Optimisation: How I Avoid the Largest 'Fees' of All

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The views, opinion and information in all articles are those of the author. These materials do not represent or reflect the views of Manulife Financial Advisors nor is endorsed by them. Manulife Financial Advisors shall not be liable or responsible for the materials of the author. 

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