Prudential Individual Life Insurance for HIV Positive Americans?

Prudential Financial Inc., one of the nation’s largest life insurers, plans to announce this week that it will offer traditional individual policies to eligible people living with HIV, a condition that for decades has excluded most of them from any but the skimpiest of coverage, company officials said.

It is the first such offering to be publicly announced by a major American insurer, and it signals a growing recognition that HIV/AIDS has evolved from a death sentence into a chronic but manageable disease, HIV advocates and insurance agents said.

The coverage, in the form of convertible 10- or 15-year term life insurance policies, will be available to people who are HIV-positive but otherwise healthy, according to the insurer. “Convertible” term policies can be converted to permanent policies covering an entire life.

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The insurer provided no further details Monday on eligibility criteria or the pricing of policies, although some insurance agents said coverage would likely be higher than for completely healthy people.

“With advances in the successful treatment of people with HIV, we are now able to offer this population the opportunity to apply for life insurance – a milestone we see as a significant step in the right direction,” said Mike McFarland, vice president, underwriting for Prudential Individual Life Insurance, in a prepared statement.

As World AIDS Day is observed Tuesday, more than 1.2 million Americans are living with HIV, the virus that causes AIDS, according to statistics from the U.S. Centers for Disease Control. An estimated 50,000 are newly diagnosed with the virus each year.

Life expectancies for HIV-positive people now are rising to the point that some American and Canadian patients diagnosed at a young age can live into their 70s. But no cure exists for the disease, which requires access and adherence to medication. And the longer that HIV/AIDS patients live, the more they are at risk for developing other conditions, including cancer, osteoporosis, and heart, liver and kidney disease.

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The life insurance industry routinely covers people with other chronic diseases, including cancer and Hepatitis C, although at a higher price than for healthy applicants. But HIV-positive people typically cannot buy individual life insurance policies, beyond minimal coverage, at any price, insurance agents said.

People with HIV/AIDS can’t legally be excluded from the “guaranteed issue” group life insurance policies offered by some employers, but those policies typically don’t pay out more than $50,000. A positive HIV test remains cause for automatic denial of higher-value individual term life insurance policies that require a medical review, agents said. That’s true even if the applicant has an undetectable viral load.

“We have not yet seen the terms of the life insurance product being offered … but it seems like a fantastic development for people living with HIV in need of term life insurance,” said Scott Schoettes, HIV Project National Director of Lambda Legal, an organization that works to protect the rights of the LGBT and HIV/AIDS community.

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“Finally, an insurance company has realized that this is the right thing to do and that it is profitable from a business perspective to offer this product to people living with HIV. Now that there is one company out there doing this, it will encourage others to do the same when they see that there is money to be made in this market,” Schoettes said.

In offering the new coverage, Prudential has partnered with ÆQUALIS, a financial services startup serving HIV-positive people, which has researched medical underwriting, life expectancy and other data on HIV/AIDS and has been key to developing the product. The startup will provide information to consumers and insurance agents as well as manage the application process for Prudential.

In its research, ÆQUALIS co-founder Bill Grant said, the company used data from “viaticals” – insurance policies sold for their cash value by people after their HIV diagnosis – to plot new mortality curves. Many of those sold policies haven’t generated income for the buyers because the patients survived much longer than expected. That analysis was convincing to Prudential and to a German re-insurer that will accept some of the financial risk of insuring HIV-positive patients, Grant said.

“There’s been just enough history to project long enough into the future to get started on this path,” Grant said.

Grant said he started the company with business partner Andrew Terrell to address inequities in coverage and to help change the national conversation about HIV/AIDS. He and insurance agents noted that life insurance often is necessary not just to protect loved ones but also for certain business transactions or to adopt children. Grant said he only learned that his brother was HIV-positive when he was denied life insurance coverage that the two brothers needed to complete a business deal.

The tabloid media coverage surrounding actor Charlie Sheen’s recent disclosure that he is HIV-positive – emphasizing his long-kept “secret” — “is an incredible reminder that this stigma still exists,” he said.

Before now, some insurance companies have quietly experimented with underwriting policies for HIV-positive clients, but the criteria have been tough to meet. Potential buyers had to be on aggressive antiretroviral treatment since diagnosis, confirm that their viral loads were undetectable and meet certain CD4 lymphocyte (T cell) counts, in addition to meeting age and other health requirements, according to insurance agents who had sought the coverage.

Aaron Baldwin, a San Francisco insurance agent who is open about being HV-positive and specializes in financial planning for people with HIV, said that he provided health and financial information on 20 HIV-positive prospects in good health to one such company, Lincoln Financial Group. All were rejected, he said.

Ed Hinerman, an independent insurance agent in Nathrop, Colorado, said he also sent Lincoln a HIV-positive client whom he believed met the company’s stringent criteria. “The denial came within hours,” Hinerman said.

Asked to comment, a Lincoln Financial Group spokesman said he could not speak to the agents’ experiences and added that the company did not currently have a specific underwriting program for HIV-positive people.

Baldwin acknowledged, however, that medical underwriting is complex, and data are lacking on the long-term effects of HIV/AIDS drugs. Underwriters may not understand the subtleties of HIV/AIDS treatment research, he said.

For example, a patient may temporarily stop HIV/AIDS medications to participate in a study on “structured treatment breaks” to reduce side effects, Baldwin said. An underwriter might see that as noncompliance. Or an underwriter might note an applicant taking an HIV medication and not understand that it’s for prevention, not treatment, Baldwin said.

“For an underwriter, it’s probably a hot mess,” Baldwin said.

Baldwin said the Prudential/ÆQUALIS initiative “represents new hope” for his clients – and himself.

He is particularly looking forward to obtaining a life insurance policy for one of his clients, a young HIV-positive man whose parents had co-signed on a new round of loans for his medical school education, unaware of his diagnosis. The young man wanted to buy a life insurance policy to protect his parents from that debt if he died.

“The new offerings will continue to open doors and allow HIV-positive people to protect their loved ones, their families and their businesses,” Baldwin said.