Challenges And Opportunities In The Dynamic Large Case Market

o What is the carrier’s experience in maintaining its cost of insurance rates?

o Does the product serve the large marketplace by offering riders associated with advanced planning strategies? This might include cash value enhancement or return of premium riders.

A product team familiar with a strong group of carrier products is important. A diversified selection of carrier and product alternatives positions the producer to provide the best and most appropriate needs-based coverage.

Case study

Assume the producer meets the client, a 75-year-old female with a net worth of $50 million and $5 million of in-force coverage. To meet the client’s objectives, the producer recommends purchasing an additional $30 million of coverage using a universal life contract with lapse protection guarantees.

During the fact-finding, the producer also discovers the client was diagnosed two years ago with adult onset diabetes. The diabetes is well controlled by Glucophage, an oral medication. No acute or chronic complications from the diabetes are evident.

To assist in the placement of the case, both product experts and underwriters will begin matching the case facts with carriers (and corresponding contracts) that have the necessary capacity and reinsurance treaties. In doing so, the team will determine which carriers have appropriate auto-bind, jumbo and in-house retention limits. For those carriers with significant limits, the product and underwriting team experts will discuss potential product alternatives with you and “bench mark” the premium costs.

Additionally, the underwriting team will work to ensure financial underwriting and medical underwriting issues are handled appropriately. In doing so, the team will use existing relationships with carrier underwriting departments and its familiarity with the different carriers’ policies, procedures, preferences and strengths. The team will also assist producers in constructing a cover letter, bringing to light the most positive aspects of the client’s health and lifestyle.

Finally, based on the client’s desire to pay as little gift tax as possible, the advanced markets team may suggest various planning strategies for the producer to consider. In this case, for example, a private financing technique may meet the client’s needs.

Along with its own internal illustration systems, the advanced markets department uses strategic relationships with carriers specializing in this strategy. Working with carriers familiar with specific strategies may give the producer access to turnkey marketing kits to assist in presenting a product and strategy to package the case for presentation to the client.

Based on the coordinated efforts of the producer and large case team, the client obtains policies from two carriers, both with significant retention and auto-bind limits, who agree to split the case. Thanks to the help of the special case team underwriting department, the carriers also offer a standard rating. The client also finds a cost-effective and tax efficient way to pay for the premium due to the assistance of the team’s advanced markets staff.

Teamwork

Producers should consider working with special large case teams that can assist them in navigating these sometimes confusing and complicated waters. In addition, producers should be sure to work with carriers that are committed to this market for the long run and which offer knowledge and experience handling large cases.

Producers who have a “client-centric” focus on matching the best product to meet the client’s needs, and who have access to strong assistance and advocacy during the placement process, will experience tremendous success in this dynamic marketplace.