This was a rather interesting week for me. For the first time ever, I had a life insurance agent cursed at me with an F word. The story started last summer when I tried to purchase a term life insurance policy from this agent. He helped my parents stop the monthly payments on their whole life policies from New York Life, and let the policies pay for themselves using the existing cash value plus the dividends. Naturally, I consulted with him about my own life insurance.
He walked me through a few options and gave me several term life insurance quotes from New York Life. I didn’t think they were affordable and didn’t pull the trigger. Later he came back saying that he is actually an independent agent and could work with many different insurance companies. He then offered to get me a few more quotes, which I accepted. In the mean time, I started to look online through sites like InsureMe, so that I can get an idea of the ballpark figure.
A few days later he came back with an attractive rate from Prudential, so we started the application process. But the insurance company had a few questions and they requested for my medical record. Unfortunately, I just switched doctor at that time so the new one didn’t have enough information about me, and my other lousy doctors that I left for various reasons weren’t too cooperative with getting my record over to Prudential. To keep a long story short, I ended up go through a few hoops, including getting a few tests done. The result from these tests concluded that I was not going to die any time soon — I was healthy.
Once Prudential received the results, they completed the application and made me an offer. The agent called with the offer; however, the annual premium was three times higher than what he originally quoted. When I asked why, he said that the insurance company found elevated liver enzymes from their independent blood test — hmm…a completely different problem all the sudden. As a result, I declined the policy saying that I have blood test done annually and none of doctors ever mention anything about my liver before.
This is when he started to tell me all kind of things about the Medical Information Bureau (MIB) and how my record is now red flagged and I’ll never be able to get another life insurance policy from any company again. When I called his bluff, he lost his temper and start saying that he wasted a lot of time on me and eventually resorted to swearing.
What Is Medical Insurance Bureau (MIB)?
This agent tried to scare me more than once using the MIB as a scarecrow, so I want to talk a bit about this entity.
Medical Information Bureau, or MIB, is a non-profit trade association that enables its member companies to share information in the form of medical codes. There are approximately 230 codes the MIB uses to signify different medical conditions. Member companies use it as a clearinghouse for all life, health, and disability insurance applications, primarily to protect themselves from fraud by cross checking medical information, and identify individuals who might be stacking coverage with multiple carriers.
The Truth About MIB
Here are a few facts about MIB that you should be aware of if someone ever try to pull a fast one on you.
- Only about 20% of applicants have an MIB record. These are individuals who have applied for individually underwritten life, health, or disability insurance coverage within the last seven years and been found to have a medical issue.
- A code can only be entered by an underwriter of a member company.
- A code stays active in the MIB system for seven years.
- Any information in the MIB cannot be used directly to deny someone insurance. In other words, an insurance underwriter cannot just decline your application because you have a record in the MIB.
- The Fair Credit Reporting Act requires insurance companies to notify you if they intend to contact the MIB and give your information to them.
- You have the right to see your MIB file, if there is one. To see your record, contact the MIB at www.mib.com.
When my ex-insurance agent told me that I will have an MIB record and will never be insured by anyone again — that is a lie. The MIB is analogous to credit bureau (i.e., Experian, Equifax, and TransUnion), and your MIB record is similar to your credit report. In the same way that your credit history and credit score are designed to help lenders make informed decisions pertaining to you, the MIB is designed to help insurers.
Pinyo Bhulipongsanon is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.