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What You Should Know About the MIB for Life Insurance

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MIB

In our experiences here at I&E, what we’ve found to usually be the case is that if someone is “inquiring” about what the Medical Information Bureau (MIB) is it’s probably because you’ve already applied for a life insurance policy and you have been told that there is something in your MIB report that is affecting the outcome of your life insurance application.

This could mean that…

Either the life insurance application has been denied, postponed, or perhaps because of something listed in the MIB report, they are no longer eligible for the rate class and insurance premium that they had originally been quoted.

Which is why…

We wanted to take a moment and discuss exactly what the Medical Information Bureau (MIB) is, explain how it is used by insurance companies and how you as an “insurance applicant” can still qualify for coverage in spite of what may or may not be on your “record”.

What is the Medical Information Bureau (MIB)

The MIB is an insurance-industry run non-profit clearinghouse containing underwriting-related information about consumers who have applied for specific types of insurance at some point in the previous seven years. The information supplied from the Medical Information Bureau is used by insurance companies to help them make decisions about offering life, health, long-term care, critical illness, and disability insurance policies to consumers.

Established in 1902, The MIB functions similarly to a credit bureau for insurance-related information. Insurance companies use the bureau mainly as a tool to help protect themselves from fraudulent activity by enabling them to verify medical and other relevant information when making underwriting decisions. The MIB contends that by deterring fraud its services help to make premium prices on insurance products more affordable.

Typically, approximately 20% or so of those applying for an insurance policy have a record with the MIB. Individuals with records in the system are those who applied for individual life, health, long-term care, critical illness, or disability coverage in the past seven years and were reported to have some sort of medical issue or other factor such as pursuing a dangerous hobby that could affect their insurability.

The information kept in the MIB is stored in such a way as to minimize the risk of disclosing personal information. Rather than storing an individual’s medical records the clearinghouse uses codes that correlate to medical and avocational data relevant to the underwriting process. No personally identifiable information that could be utilized for the purposes of identity theft is included in the repository.

More details about the MIB:

  • There are over 200 medical codes used to designate different medical issues
  • Only underwriters working for member firms are allowed to enter a code in the system
  • Codes remain active in the MIB for seven years
  • MIB codes relating to medical conditions are taken from the International Statistical Classification of Diseases of Diseases and Related Health Problems 10th Revision (ICD-10) utilized by the medical industry, although only a portion of the codes featured in this publication are used by the MIB
  • Because it is treated by the government as a consumer reporting agency, the MIB must adhere to the same disclosure rules that credit reporting agencies follow. Thus, if an insurance company plans to provide your information to the MIB, the Fair Credit Reporting Act mandates that they notify you beforehand. You can also request a copy of your MIB report and you can dispute any errors that you believe are contained in the report
  • Insurers are not allowed to use information found in the MIB to directly deny you insurance. Information contained in the MIB is just one portion of the overall application process. The information’s main function is to enable insurance companies to verify your medical history and relevant work and avocational data so their conclusions about your insurability is accurate.
  • All information submitted to the MIB is regulated according to the HIPAA regulations

What Type of Information Is in an MIB Report?

The MIB collects the following information:

  • Credit information
  • Medical conditions
  • Medical tests and results
  • Dangerous avocations and hobbies (skydiving, motorcycle riding, etc.)
  • Habits relevant to the underwriting process such as smoking, gambling, drug use, etc.
  • Motor vehicle reports (driving history and accidents)

Any information collected by the MIB will remain on file for seven years. If any members of the MIB request your file that fact is listed for 12 months from the time of the request.

What is the Purpose of Collecting This Information?

The information contained in the MIB helps member insurance companies make decisions regarding the potential longevity and health of insurance applicants. Using the MIB helps insurance companies detect errors, misrepresentations, or omissions contained on insurance applications.

These companies make money by selling insurance to people who, on average, pay more for the insurance, including fees and earnings on premiums, than they get back in insurance payouts. Thus, these companies price their products so that the best premium rates are offered to customers likely to be able to pay premiums that over time more than make up for any payments made to them or their heirs.

By gathering information about health conditions and other factors that can impact an individual’s life expectancy and health, the MIB enables insurance companies to make more informed decisions when it comes to pricing their policies. If enough individuals provided false data to insurance companies about their insurability, it would drive up the prices of insurance for everyone by forcing insurance companies to charge higher rates to make up for the losses they were sustaining due to the inaccurate information received during the underwriting process.

This is why insurance company health exams typically include blood and urine tests which help them verify the health information you have provided on your application. For instance, applicants who use tobacco might try to hide this fact in order to receive lower rates on an insurance policy. The health exam used in the application process provides insurance companies with a way to catch misrepresentations of this type.

How Do Insurance Companies Use the MIB?

As we have seen, the MIB helps insurance companies prevent fraud in the application process and accurately price their policies with regard to the healthfulness and other factors relevant to the underwriting process associated with an individual.

These companies use the information provided by the MIB to help reduce the risk of anti-selection, which refers to an insurance company insuring an individual at a lower risk rating than should be the case due to misrepresentations in the underwriting process. By providing a central repository for this information, the MIB simplifies the process of guarding against anti-selection among its member insurance companies.

The records collected by the MIB are contributed by member insurance firms from information they collect during the application process. If you apply for life or health insurance, long term care, disability income, or critical illness insurance the underwriting process involves answering a number of questions about your health, lifestyle, and hobbies.

In addition, in many cases a health exam or a physician’s report is also required. An insurance company will use this information to estimate the risks involved in insuring you and use it to assign you to an underwriting class which they believe best fits the risk you represent to the company as an insured. This class designation is responsible for determining the amount of premium an insurance company will charge you for purchasing a policy.

In addition to outright fraud, in some cases people applying for insurance may overlook pertinent information or forget to include it in their application. By collecting data that is relevant to the underwriting process, the MIB enables insurance companies to catch these oversights as well as intentional misrepresentations from individuals attempting to conceal relevant information in order to obtain insurance at a cheaper price than is warranted. The protection the MIB provides against these types of intentional or unintentional errors helps ensure that member companies are fully cognizant of the risks they are underwriting.

As mentioned previously, information obtained from the MIB is only one aspect of the entire insurance underwriting process. Many individuals seeking insurance coverage don’t have records in the MIB, and even for those who do an insurance company will not rely entirely on the MIB when evaluating an individual’s insurability. Rather than use it as the sole determinant of an individual’s status as a potential insured, insurance companies will utilize it to augment their other underwriting efforts by using MIB records to help them verify information they have gathered in the application process.

In cases where an insurance company discovers new medical or other information relevant to the underwriting process in the course of processing an application, they must provide this newly discovered information to the MIB using the relevant code details. This information is then available to all MIB members who access the clearinghouse’s database.

Such details could include:

  • Adverse diagnostic test results from EKGs, stress tests, etc.
  • Nicotine detection indicating cigarette or tobacco use
  • Lab results indicating elevated levels of liver enzymes or cholesterol, kidney malfunction, etc.

Insurance companies generally require a signed HIPAA Compliant Authorization with an application, giving them the needed authorization to research your MIB file.

All MIB members will cross reference MIB data on every application they process. This is true whether you do a traditional paramedical exam with your application or elect to use simplified issue life insurance or request accelerated underwriting.

As mentioned previously, the large majority of people have no MIB file, either not having applied for insurance within the past seven years or having no applicable information to be reported to the clearinghouse.

In situations where there is conflicting information between your insurance application and the MIB, the insurance company will typically reach out to you in attempt to resolve the discrepancy. The goal in these cases is to ensure that the company can offer you insurance at the appropriate rate class.

Insurers use the MIB in conjunction with information they acquire during the underwriting process to compile a complete picture of the applicant’s insurability profile. A company receiving an insurance application will be able to gather information from the application relating to your health and employment history, hobbies and other relevant info. The health information generally includes treatments you may have received for various medical conditions, dates of diagnosis, and medical history sources.

For instance, if you had surgery for a condition such as skin cancer this would go on your medical report during the underwriting process and from there be entered into the MIB. If you were to then apply for insurance with another carrier, they would use the MIB to access relevant information about this surgery, including how the information was acquired, whether via an Attending Physician Statement (APS) or through some other means.

In this way, the insurance company will combine information such as this with records pertaining to prescriptions and any other statements from physicians to form a complete picture of your overall health status and check this against your application to verify that the information you have provided on it is correct.

MIB Information Security

As mentioned previously, the MIB must comply with HIPAA regulations regarding the security and privacy of healthcare records. Given the danger of hacking and other cybercrimes in this day and age, protecting healthcare records from security breaches is of vital importance. By keeping its records in coded form throughout their lifespan, the MIB renders this data useless to any hacker who might somehow acquire it.

Additionally, the Medical Information Bureau ensures that access to its records is strictly limited to authorized individuals at the MIB itself or at member firms. Each time an individual requests access to a report, they must provide their authorization credentials to prevent any unauthorized release of MIB data.

How to Access Your MIB Report

Individuals who have applied for life or health insurance within the past seven years can apply to receive a copy of their MIB report, if one exists, at www.mib.com. The report will be provided to you free of charge, however, you can only request your report once per year.

The accuracy of MIB reports has been said to improve in recent years, with one report showing that only a very small number of consumer files, from 1-2% or so, need to be amended after being reviewed by consumers.

That being said, if you do find an error on your MIB report, the Fair Credit Reporting Act specifies the steps which need to be taken to request that your report be amended.

The act calls for a reinvestigation process that you can initiate via the MIB website by signing a Request for Reinvestigation form. There is no fee to submit this form. See “How to Dispute Your MIB File”.

On the form you will need to provide some information about yourself as well as specifying the incorrect information that you discovered when reviewing your report. The investigation process takes approximately 45 days on average.

Generally, the more information you provide regarding the issue, the more rapidly the process can be completed. Once the investigation has been completed, you will be informed of the result by mail.

Using the MIB to Locate Lost Insurance Policies

A convenient service provided by the MIB is helping individuals locate lost life insurance policies. The clearinghouse’s website provides a checklist you can use to help find a lost policy.

You can also sign up for policy locator services through the MIB. To use the service, you must be an administrator, trustee, or executor of the estate of a decedent.

While the search can indicate an application’s existence, it does not specify whether a policy has been issued or was in force on behalf of the insured.

Also, only applications from January 1996 or thereafter with MIB member companies will show up in the search results.

Guaranteed Issue life insurance policies and military issued life insurance are typically not available via this search process.

Ok…

So not that we have a better understanding of what the MIB it’s important to understand how knowing your “application history” can be quite useful to a life insurance agent.

You see…

Here at I&E we’ll often ask if a client has applied for another life insurance policy within the past 12 months.

Now, it is not because we’re nosey but mainly because we want to know if within the past 12 months there is a recent notation on your MIB history.  If so, we’ll want to know that outcome of the application.

And here is where…

Working with an experienced life insurance agent like those at I&E can make all the difference, because, there are many factors that can come into play that will create a MIB record for you that might not always mean the same thing for every insurance carrier.

For example…

It’s quite possible that you may on occasion use marijuana for recreational purposes.  Well if this is the case, and you choose to apply with the “wrong” life insurance company, you could very well have a MIB notation indicating that you have been denied coverage in the past.

And while…

Nobody wants to have a “denial” on they’re record, an experienced insurance agent who is aware of this denial can notate that denial in one’s future application, only this time choose a life insurance company that is “friendly” towards recreational marijuana usage.

In cases like these…

Not only can we avoid having your life insurance application getting denied again, we can also explain why you were denied in the past, thereby significantly increasing your future chances for success.

And here’s the thing…

Most (if not all) top rated life insurance companies actively participate in the MIB program.  Each with their own unique underwriting guidelines which will dictate who they will and won’t insure.

Which means that while recreational marijuana use may seem like an obvious reason why someone might be declined coverage, there are all sorts of other reasons why an individual could be denied coverage by a particular insurance company thus affecting your MIB report.

Reasons such as:

  • Where you like to travel.
  • Hobbies you like to participate in.
  • Certain career choices.
  • Certain prescription medications.
  • One’s driving history.
  • Previous felonies or misdemeanors.
  • Etc

This is why…

We at I&E also choose to work with many different life insurance companies so that if we encounter a client who may not be eligible for coverage with one company, we can always turn to another top-rated life insurance company that may be a better fit.

So, what are you waiting for?  Give us a call today and see what we can do for you!

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