Should Our Industry Come Up with Any Cognitive Impairment Test?

[bobson]

To the carriers a phone interview will be all about them. Though it will help to protect the agent too.

For Annuities, the phone interview would not really be for the same reasons as LTCI.

LTCI they are worried about a potentially lengthy & expensive claim due to dementia.

For the FA it would be about cognitive ability to enter into a binding legal contract and understand that contract.
A person with dementia or impaired mental status can be approved for an annuity with no problem. They just need a spouse, family member, or POA involved in the sale.

So if the person did not pass the phone interview it would not be a decline. They would most likely require you to go to a doctor and have them perform a more thorough examination. If the doc clears them great. If not, then the carrier would probably require a POA involved in the sale at that point.

I think this would be great for the industry and will be necessary in the future due to our litigious society.

The carriers will do it to protect themselves, but it will protect us agents too.

I think you will run into trouble with anti-senior discrimination laws. You can't discriminate because of someone's age. Making a senior jump through all those hoops for a financial transaction won't fly.

 

[VolAgent]

I think you will run into trouble with anti-senior discrimination laws. You can't discriminate because of someone's age. Making a senior jump through all those hoops for a financial transaction won't fly.

It won't even take that to stop it. As long as the carrier isn't on the hook, they aren't going to spring for the test. With an annuity, they can just point to the agent, refund the premium and call it a day. Just look at Glenn. Allianz completely abandoned him and faced no repercussions other than refunding the premium. Considering they also got the commission back, it was probably a profitable transaction for Allianz.

 

[scagnt83]

I think you will run into trouble with anti-senior discrimination laws. You can't discriminate because of someone's age. Making a senior jump through all those hoops for a financial transaction won't fly.

Like it or not, I would bet that this will happen eventually over the next 10-15 years.

Are you aware of the process if an agent tells the Carrier that they suspect mental impairment?
Many companies conduct a phone interview or ask for a cognitive exam from the applicants doctor if this happens.

But with more and more annuities being sold carrier direct and over the phone without ever physically seeing the client; the carriers will have to start protecting themselves more and more.

And technically it would be for the clients protection so big bad insurance agents dont rip off all of the vulnerable seniors out there... at least thats how it would be spun...

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It won't even take that to stop it. As long as the carrier isn't on the hook, they aren't going to spring for the test. With an annuity, they can just point to the agent, refund the premium and call it a day. Just look at Glenn. Allianz completely abandoned him and faced no repercussions other than refunding the premium. Considering they also got the commission back, it was probably a profitable transaction for Allianz.

Carriers settle cases like Glenn's every day. I saw it from NYL back when I was captive. The reason we have never needed the safeguards we do now is because traditionally the complaining party accepts a settlement and it never makes the courts or the news. But it still costs the carriers money to settle.

The problem lies with people bent on going to court. Like the son in Glenn's case. He really pushed for all of this it seemed. And the AG was more than happy to go right along and score a win in the papers.
The more this happens, the more it will become a problem for carriers.

But I go back to my point of phone sales and carrier direct sales. And the more unreasonable people the carriers/agents encounter (like the son of the client in Glenn's case). And the more they are forced to go to court (it will probably happen to a carrier direct sell one day... hopefully not though).... the more probable a phone interview will become.

jmho

 

[VolAgent]

Scagent, you could well be right. And there is some overlap in our opinions. I just don't see it happening until it affects the carriers' bottom lines. Either in settlements or reduced premium. That or some outside force starts pushing for it and the carriers move to preempt it.

 

[sonic1]

Do you know if any agent by themselves have such a test that they use just to protect themselves?

 

[bobson]

Like it or not, I would bet that this will happen eventually over the next 10-15 years.

Are you aware of the process if an agent tells the Carrier that they suspect mental impairment?
Many companies conduct a phone interview or ask for a cognitive exam from the applicants doctor if this happens.

But with more and more annuities being sold carrier direct and over the phone without ever physically seeing the client; the carriers will have to start protecting themselves more and more.

And technically it would be for the clients protection so big bad insurance agents dont rip off all of the vulnerable seniors out there... at least thats how it would be spun...

There very may well have a cognitive test but it won't be reserved for seniors. Anyone buying any annuity will be forced into it so we aren't discriminating. Meanwhile the stockbrokers will continue to peddle there wears unimpeded.

 

[Tahoe Ray]

Do you know if any agent by themselves have such a test that they use just to protect themselves?

Some of these "CYA" tactics have been interpreted by regulators as the agent knew something was wrong to begin with...I don't have a specific citation but I do recall reading about it.

 

[VolAgent]

There very may well have a cognitive test but it won't be reserved for seniors. Anyone buying any annuity will be forced into it so we aren't discriminating. Meanwhile the stockbrokers will continue to peddle there wears unimpeded.

I won't comment on testing everyone. But don't think RRs are getting a free pass. FINRA and the SEC are coming for them. The days of stockbrokers serving middle America are numbered. Who will take a small account now? Edward Jones, an insurance RR, maybe the new guy who just needs assets?

 

[scagnt83]

Edward Jones, an insurance RR, maybe the new guy who just needs assets?

Pretty much!

A younger neighbor of mine is taking advice from a "buddy" who is brand new to the biz (i wont say which firm).

This guy is putting $500/m into an IRA with no existing assets. The RR is putting everything into highly front loaded small caps and emerging markets. Very little that is solid and high quality with a firm history behind it.

Sure the kid needs to take on risk. But he is swinging for the fences when the pitcher is throwing a knuckle ball... he needs to diversify at least a tiny bit. But the RRs that will take him with no assets and that little per month are few and far between.

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Some of these "CYA" tactics have been interpreted by regulators as the agent knew something was wrong to begin with...I don't have a specific citation but I do recall reading about it.

I believe that was an issue in Glenn's case. He had a separate cya form signed and the AG used that against him in the trial to show that he new there was an issue. I think he did that for all clients but im sure that was glossed over in trial.

Damned if you do.... damned if you dont.

 

[sonic1]

Definitely puts an agent in a tough spot. I was thinking id devise something but it appears that isn't much help or may hurt perception.