Pre-ex Clauses Look the Same: But They're NOT!

Winter 2001 CSANews Issue 41  |  Posted date : Apr 03, 2007.Back to list

"I am annoyed at Mr. Quigley's defense of Medipac Travel Insurance each year. Prior to our trip each year I check rates and Medipac are never, repeat never, competitive. They are extremely high. The nitroglycerin example appears to be a lame duck. Mr. Quigley is a great skater." Signed Jo.

Ouch! We get very few unhappy letters like this, but when they do show up on our doorstep, we look at them as an opportunity to make a new friend and, hopefully, have them become a long-term client. At the risk of causing further annoyance, I would like to try and "defend my defense".

The first thing I must point out is that we are rarely the absolutely lowest rate. The one pricing area that may be an exception, is at the older ages. Very, very few insurers are willing to even write insurance over 75 ­ but we do! Medipac's oldest client was 102 years old and we will continue to force our insurers to provide benefits for the older ages. We believe that that is when you need us the most.

Medipac's competitors are, generally, a pretty vicious lot and their primary goal is to convince an insurer to beat our prices. In general, they feel that, unless they can beat our prices, they will not write any business, and they are right. So how do they do that? An example of one of the many different ways, should prove helpful. When a potential client looks at the Medipac application, they see a medical question that asks about certain medical conditions during the past five years. This tells us what rate to charge and Medipac will normally insure you for those conditions and pay your claim, if they have been stable for 90 days. The good competitors will get their rates below ours by refusing to accept premium from any person who answers their 5-year question "Yes". This is OK, in our opinion, as they are saying they only want to cover the purest of the pure health risks (about 1-2% of the traditional snowbird population) and they don't issue a policy to you, otherwise.

The next type of competitor will have the same type of 5-year question and they WILL take your premium, just like Medipac does. The difference comes at claim time. They will only pay a claim for the "Yes" answer if it has been stable for 5 years. This means no treatment, no drug changes or adjustments, no new symptoms, no nothing, in 5 years. Notice that the 5-year question and the 5-year stability period can be a little confusing. Can anyone be truly stable for five years? I might question whether they actually have the condition, if it has been totally stable for such an extended period of time. This will result in you a cheaper price. They take your money and will often deny your claim because they will find out, yes, they expect to find out, that you have not really been stable for five years. The stability period may be less than 5 years with some companies ­ perhaps 3 years or even one year ­ still a very long time.

I get mad thinking about the next type of competitor. The word "scum" comes to mind. Are you still with me? The same 5-year medical question is on the application ­ See! It's sort of like Medipac - and there's the same type of pre-existing/stability statement for, again, 5 years. All of those pre-ex/stability clauses look, sort of the same, well, they're NOT! This one says that if you ever took a drug, or had treatment in the 5 years, you're not covered. Stability isn't an issue. These garbage plans call the clause a "firm" pre-existing clause. Let me repeat that. If you take medication you are NOT covered for anything "related directly or indirectly" to that condition. My guess is, you can get a pretty good price when they won't be paying your claim. Why don't they tell the truth ­ up front, "Don't buy this policy if you have taken medication in the past five years".

In closing, I want to point out that the nitroglycerin example is based on a real case with real people. The lame duck is, unfortunately, the client. In the Travel Medical Business never shop for the price, shop for the policy. I'm not really a very good skater, but when I do skate, I always check the thickness of the ice, first. I want it to be really thick and strong, just like my insurance policy.

PS. Give me a call Jo and I would be happy to review your policy for this year.