Chris Coulter is president of The Finish Line Group, a wealth advisory for entrepreneurs.
If you use a private medical clinic − like Medcan, Medisys or the Cleveland Clinic − it may cost you more for life insurance. In some cases, it may cause a postponed decision or an outright decline by an insurance carrier. This may not seem significant to some individuals, but for business owners, this can have a huge impact on how you go about setting up shareholder agreements, buy-sell arrangements, key-person arrangements, permanent life policies, split dollar critical illness or other wealth, succession planning and tax-planning strategies that involve the use of life insurance or other related products.
This is not the fault of the private medical clinic. A host of private clinics located throughout Canada, provide fee-for-service evaluations to individuals, families and businesses. These consultations are thorough; you see a multitude of medical practitioner experts discussing fitness, nutrition and overall health. They do a deep dive into your state of health and fitness, run a battery of tests, discuss family history and many other items on their medical checklists. These appointments usually last four to five hours, are succinct and professional, and follow up with a series of reports and test results. It resembles a day at the spa more than a trip to the doctor’s office, except they identify any potential risks to the client and mitigate against these risks. All uncertainties are explored comprehensively. No rock goes unturned because the most benign issue gets addressed.
This, however, is where the problem lies.
Private clinics try to put their clients' fears at ease and the clients pay a significant amount of money for this peace of mind. Insurance companies tend to exploit any potential issues as risks and vulnerabilities. Instead of rewarding people for doing a comprehensive evaluation of their health, the insurance companies see this as an opportunity to promote doubt, cautiousness and vulnerability. Insurance companies look at people who are proactively taking care of their health and uncover potential issues as the larger risk to their underwritten policies. If a potential trace of illness or risk is identified at a private medical clinic, it’s documented, examined and a regimen of tests are conducted. Would any of these low-probability ailments be identified with a routine doctor’s visit or life insurance qualifying examination? Perhaps, but likely not. The problem with these private clinics for business owners is their thoroughness. The thoroughness creates doubt with insurers.
The thoroughness is the reason private clinics' clientele return year after year. These clients want to identify any potential long-term risks and get ahead of the problem. Insurance companies appear to take a completely different stand: Thanks for being so proactive in dealing with your health but now we’re going to penalize you for it.
A lot of the clientele at these private clinics come from money or are business executives or business owners. These individuals are likely to have estate-planning issues, business-insurance requirements or family-insurance requirements. If these individuals are given a a policy at a higher rate or they are declined coverage, it can have a significant effect on their ability to afford or qualify for insurance in the future. A declined, postponed or rated insurance policy can influence the amount of taxes business owners ultimately pay, and his or her ability to transition from one owner to the next or provide ample capital to a business for its continuation if an owner should pass away or become critically ill.
Recently, a small number of insurance companies have been looking favourably at proactive wellness measures. They identified that fitness, counselling and regular checkups can contribute to better overall health and as a result offer lower overall life insurance rates. Unfortunately, this is currently only offered in the family market with term life insurance. The insurance company that first embraces comprehensive physical evaluations, like those conducted in private medical clinics, as a positive step in one’s health will be rewarded for its pragmatism within the business insurance marketplace.
Until insurance companies deem that comprehensive medical examinations by private clinics are a proactive and decisive measure, we should continue to expect business owners to be penalized by insurance companies for taking an in-depth account of his or her well-being. There’s no question the private clinics bring tremendous value and peace of mind to business owners and executives, but it may be prudent to address any potential life insurance needs prior to making an appointment at a private clinic.