Agents should place each client with a company that will not take anyone
in worse health, thus assuring clients the minimum ultimate cost.
The client buys a policy from a carrier where most other insureds
are in at least as good health, so that, on average, the applicant
gets a “subsidy” from the other insureds, rather than provides one
to the rest of the group. For clients without health problems,
agents should seek out the most rigorous underwriter so as not
to disadvantage those clients.
On a regular basis, a husband and wife both apply for coverage and
one of them is declined. The agent then recommends the couple apply
to another carrier with more liberal underwriting standards and,
if the carrier approves both applicants, the agent advises the couple
to accept both policies (thus “rewarding” the second carrier while “punishing” the first).
The diligent agent should advise the unhealthy person to accept the coverage
from the more liberal company and the healthy insured to accept coverage
from the more rigorous one.
LifeCare Assurance Company, Woodland Hills, Calif.
Reproduced from National Underwriter Life & Health/Financial Services Edition, January 21, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.