Life & Health Insurance/what now?

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Question
QUESTION: I applied for life insurance three months and two days ago.  I am a VERY healthy woman with no major medical concerns. However, four years ago, I was incorrectly diagnosed with anxiety and prescribed medication, which did not work because the problem turned out to actually be something completely different, a voice condition eventually treated with speech therapy. (long story) But because my medical history, which I answered honestly, contained a past with anxiety medication, the insurance company requested medical records. I received an email two days ago saying that they were having trouble obtaining my medical records.  Today I got a letter dated SEVEN days ago saying that they had cancelled my application because they couldn't obtain my records.  
I have read that putting in an application at multiple companies is not a good idea, but what are my options now? I am shocked. I deserve the very best rates a company offers, and fear that I will have to settle for standard rates because of this. It's not fair. I'd rather go without a policy than to agree to something unfair. Any advice?

ANSWER: Alison,
your explanation raises a number of questions in my mind.  I am out walking my dog right now so I cannot type out all the questions I would like to ask.  if you don't mind I would like to respond to you tomorrow morning.
Bill

---------- FOLLOW-UP ----------

QUESTION: Thank you. I'll look forward to hearing back.

ANSWER: Alison,
My apologies for the delay...my weekend got hectic.  Here are my main questions...
Were you working with an agent?  I'm guessing that you were and that the agent sent the email, but that the insurance company sent you the letter dated 7 days earlier.
On the surface it sounds like your agent did you a HUGE disservice.  It is the agent's job to follow up with attending physicians to make sure they provide the insurer with the requested information.  If I understand the situation correctly, here is what I suggest you do.
1. Find a different agent -- one who is successful and has lots of life insurance experience...preferably an independent agent who isn't tied in to one company.  Ask them to shop around to get you the best deal.  Also, you might want to consider buying my book, "Buying Life Insurance -- What You Need to Know".  It is self-published on Amazon and is available for the Kindle.
2. Call the office of the physician who made the original misdiagnosis and confirm that they did receive the insurance company's request for information.  If they did, ask them why they didn't provide it in a timely way.  Also, explain that you are going to reapply to a different company and make sure that they know how important this is to you so that they will make it a priority when they get it.
Good luck, and let me know how it all turns out.  You can email me directly at...bill@actuarialanalytics.com

---------- FOLLOW-UP ----------

QUESTION: I contacted the physician's office twice, and the insurance company tried numerous times. The fault with that really lies with the physician's office.  It's just that it took so long that they closed my application.  They said that they would reopen when they get the requested information.  But my question is whether I will be penalized in any way by going elsewhere because I have read that it is not good to apply to multiple companies because it "looks bad."  In fact, it's one of the questions they ask in the beginning of the application process, as to whether I have applied elsewhere... and of course with my SS# they could probably find that out anyway.  Is it true that because of my physician's negligence I can never get a decent premium?

Answer
Alison,
Companies expect people to shop around and they know that other companies may evaluate a health risk differently than they do...so the fact that you applied for coverage previously will not be a problem.  What WILL be a problem is the unresponsiveness of your doctor's office.  You are correct that your earlier anxiety medication is likely to be discovered by any new company that underwrites you.  I would strongly recommend that you have a "heart to heart" discussion with that doctor so that they really understand the impact of their actions.  Their physician's report should be very simple..."I made a preliminary diagnosis of 'anxiety' which we later determined was incorrect.  As a result of that misdiagnosis I prescribed a medication that Alison took for a brief period until we realized it wasn't helping."
Until you are confident that your doctor will provide a response to the insurer's inquiries I would recommend that you not apply for coverage elsewhere...and be sure that your doctor knows you are going without life insurance until he can respond to them.
Good luck, and please let me know how this gets resolved.
Bill

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William Hezzelwood

Expertise

I can answer almost any question about life insurance, such as: 1) What kinds of life insurance are available? 2) I have an old policy that is in danger of lapsing...should I pay more money into it? 3) I think my insurance company is not treating me fairly...do I have grounds to sue them? 4) My agent has proposed that I buy insurance from company X...is that a good, reputable company?

Experience

I am recently retired from a 40-year career as an actuary for a major life insurance company. I worked in the life insurance division and had a wide variety of responsibilities, such as: product development, systems development and management, field compensation, and program management.

Organizations
Fellow of the Society of Actuaries (by examination) Member of the American Academy of Actuaries Member of the Forensic Expert Witness Association Member of the American Association of Economic and Financial Experts Member of the National Association of Forensic Economics Member of the Financial Planning Association of Orange County

Education/Credentials
I have a B.S. in Business Administration (major in Actuarial Science) from Drake University.

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