Did you know that if you are over 70 and need life insurance, you may be asked to perform a memory test? Or if you prefer to use good-looking life insurance companies, a cognitive impairment test. <! – ->
This type of test has not been around for a long time, it's actually a relatively new ploy in life insurance policy. Keep reading and we will share a real example with you that will at least raise an eyebrow.
Just recently I had a new client I was working with who needed a permanent life insurance solution for the reasons stated in the following paragraphs.
To protect the integrity of the innocent, let's call him – Mr. Smith. <! – ->
Mr. Smith is in his early 70s, 73 to be exact. He is retired from working in a federal government position and had chosen (years before I ever met him) at his retirement to have a "lifelong" option for pension payments.
Choosing the life-only option is very common among public servants, retired teachers and union workers to name a few.
Why? <! – ->
Why choose the Only Residence for Life option?  lifelong pension payment option "width =" 300 "height =" 300 "data-lazy-srcset =" https://theinsuranceproblog.com/wp-content/uploads/2020/12/1-1.jpg 300w, https://theinsuranceproblog.com/wp-content/uploads/2020/12/1-1-150×150.jpg 150w "data-lazy-sizes =" (max-width: 300px) 100vw, 300px "data-lazy-src = "https://theinsuranceproblog.com/wp-content/uploads/2020/12/1-1.jpg" />
Mr Smith receives a major check each month to choose the Single-Life or Life-Only option.
More money is better, right? Very true, when you retire, more money flowing in each month is generally a better option.
But that creates some problems for Mr. Smith or more precisely, it creates a problem for Mrs. Smith because now that Mr. Smith is dying, she is left without income from his public pension.
The term "only life" is clearly represented by the annuity or in this case his government pension, will only pay monthly the rest of his life. Shockingly, I know, an insurance industry expression that actually means what it says – as difficult as Sasquatch to say the least.
But I deviate.
Fru. Smith's monthly income would decrease by more than 75% when Smith passes away. <! – ->
How pension maximization solves the problem
Without going into too much detail about their plan … as it is not our focus here, the solution they chose to strive for was to buy a life insurance policy in mr Smith's life and make Mrs Smith a beneficiary.
This way, when Mr. Smith dies and his retirement income ends, Mrs. Smith will receive a lump sum from the life insurance death benefit that she can use to generate an income stream, pay off her mortgage or whatever she than desired.
But the goal is to give her some security in the event that Mr. Smith dies before Mrs. Smith and thus also makes his very nice retirement income.
Simple enough … right? <! – ->  The life insurance company requires a memory test
Mr. Smith is in his early 70s and like many other Americans, his health is no longer perfect. Not to mention that his health is poor, just not perfect. He takes some prescriptions and has some other issues that life insurance companies may not see as extremely high risks, but these are conditions that really prevent him from getting a preferred plus (best) health rating.
This is all that veteran insurance agents expect to encounter during insurance. But to add a new wrinkle to the insurance equation, many life insurance companies now require everyone who applies and is over 70 to implement a cognitive impairment. Which is just a nice way to say, they want to let you take a memory test.
It goes without saying that life insurance companies have found some evidence linking dementia and Alzheimer's with an increased risk of dying before your life expectancy.
Basically, since we all know that dementia and Alzheimer's disease are degenerative diseases, life insurance companies now require their older applicants (most of whom are over 70 years old) to complete the insurance memory test. And of course, in addition to the typical medical history, blood and urine testing that has always been required. <! – ->
I know that most of us, myself included, tend to believe that people who are diagnosed with dementia live long after the diagnosis. Interestingly, research shows that this is just anecdotal evidence. Probably because we all know horror stories from the family or friends who were diagnosed with Alzheimer's in their fifties and are living well into their 70s or 80s.
However, life insurance companies insist that their data show that this type of thing is rare.
It was actually a study published in 2008 by the British Medical Journal (BMJ) that shows that people with dementia have a significantly shorter life expectancy.
What is a memory test for insurance?
Unfortunately, the type of test that insurance companies have adopted as a standard to clear " this person has a cognitive impairment " much to be desired. In the case of Smith, the insurance company has its own version of a memory test.
What does the test you ask look like?
The paramedic examiner, in this case, an RN, who came to Mr. Smith's home to see him, discuss his medical history, perform an ECG, collect fluids, and any other normal things an insurance company would request for a person of 73 years, also performed a "memory test".
The test consisted of her reading to him a series of ten common nouns – chair, book, table, cow, penny, balloon, flower, picnic, kitten and bank.
The nurse said to him:
“This is a memory test. I will read aloud a list of words one at a time and ask you to say the word and then use the word in a sentence. When you have completed the word in a sentence, I will ask you for the next word until the whole list of words is complete. Later in our interview I will ask you to remember the words. "
She then continued with the test and had him perform a walking test, asked him some other questions and six minutes later she said:
" A few minutes ago I read a list of words that you can use in sentences. Please tell me the words you remember. Take as much time as you need to remember the words.
I will not bore you with all the instructions in the side column of the form that the nurse had to use from the insurance company. But the instructions are very clear that if at least five minutes have not passed since you performed the first part (list of words and sentences), then continue and come back to this.
Mr. Smith remembered four of the ten words.
This resulted in an automatic decline for Mr. Smith due to possible cognitive impairment. You must have at least five to meet their minimum drawing standard. In this case, the life insurance company chose not to look at his medical records, laboratory results or medical history at all. They simply chose to deny him coverage based on cognitive impairment. With no alternative to reconsider.
That is not entirely true. He could be reconsidered if he were to see a doctor and pay about $ 500 out of his own pocket to have a more complete cognitive examination performed.
Gee, thank you.
As far as I know, there were no notes regarding such a problem in his doctoral records, no other such problems had ever been observed by me either.
* Sidenote: I had met Mr. and Mrs. Smith on several occasions when we discussed their options more than once while deciding which option to pursue. I also talked to them on the phone a few times as well.
In fact, Mr. Smith regularly runs a portable sawmill in his backyard, restores antique cars and runs a tractor excavator for friends. 19659054] Does he seem to have a memory problem?
Of course, the life insurance industry has research on its side regarding the increased risk of premature death due to dementia or Alzheimer's. 19659009] However, I have two problems with this test of cognitive impairment:
- What they convey as "legitimate testing" for cognitive impairment.
- There is no accepted standard across the board for testing memory insurance.  And besides, I would be willing to bet that most of us would have a hard time doing as well on the memory test as they refer to it.
As a check, I performed testing with my unsuspecting wife. She is a perfectly healthy and sharp 41-year-old woman who runs her own successful business while she runs our household with the precision of a Swiss watch that I can add.
She could only remember 6 of the 10 words. This would place her in a standard class at best for life insurance purposes. To give you some perspective, there are at least three class classes better than a standard interest rate at most companies.
For example, Standard, Standard Plus, Preferred and Preferred Plus are the best class. Keep in mind that my test was not scientific. But neither is the test administered by the nurse examiner on behalf of the life insurance company.
As it looks today, every company has a different type of memory test. In fact, I've already seen three different ones from three different insurance companies in the last month to do some quick searches on Google.
I know that life insurance companies must do what they can to guarantee all the possible risks that affect their applicant's mortality. No one will fail them to do so. As I often say to my clients, "do you want to have a policy with a company that is profitable … only companies that remain profitable will pay the damage when you die"
But perhaps the life insurance industry should use a more comprehensive way of measuring cognitive impairment and be consistent. Not an "off the shelf" memory test that is similar to one of the gimmicky things you can find online to read the palm of your hand or the type of personality you have.
So if you are approaching 70 and considering any changes in coverage, it may be wise to do so well in advance of getting there.
On the other hand, if you are 70, it is best to spend some time with an agent who knows what companies have for testing to ensure you get the best risk grade possible. And if you are an agent who is meeting a 70+ year old life insurance client, you should spend some time getting acquainted with the various tests.