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November 11, 2001 at 07:00 PM
Guaranteed Issue Is A Hot Topic In This Time of Rebuilding
Our world was changed on Sept. 11, 2001. We’re rediscovering the intrinsic value of our core human security industry. All of us are rebuilding, even as we cope with anxiety and look to the necessity of being ready.
Today, well look at this as it applies to life insurance for people with medical impairments.
My article on rebuilding, in the Oct. 1, 2001 issue of National Underwriter, discussed how the super-important fields of “intelligence” and “profiling” can help deal with risk. In the insurance industry, we call those concepts “underwriting” and “risk classification.”
In doing risk classification, the insurance objective is to cover as many people as possible at standard rates. However, there are always some people with health historiesthe “impaired risks”–who do not qualify for standard.
On average, 5.7% of applications are issued substandard, and 3.8% are rejected. One way to handle these cases is with substandard rating-up abilities (see my article in the Nov. 6, 2000 NU).
In this article, we will look at another way to handle these impaired risks: Guaranteed Issue. This approach–which entails writing coverage with no medical information, or sometimes very limited medical information, on the client–has become an amazingly hot topic in the industry since September 11.
(By the way: Guaranteed Issue is also a very convenient way to cover numerous people who are not impaired.)
There are many varieties of Guaranteed Issue cases. The chart on this page summarizes them.
Large Amount Executive Coverage (Guaranteed Issue) is typically issued in the middle to upper age ranges. (That is where the executives are).