Note: This is the seventh article in a series of 12 discussing the benefits of using the Laser Underwriting Approach, which utilizes an agency-based staff underwriter. Each story in the series addresses one of the 10 preliminary questions that make this approach effective.
The Laser Underwriter Approach yields accurate life insurance quotes and keeps the underwriting process smooth by asking these 10 key questions:
1. What is your client’s medical history, including conditions, treatments, or medications?
2. What is the amount of the application?
3. What is your client’s age, tobacco status, height, weight, and ability to live on his or her own?
4. Are you in competition? What are the other companies, face amounts, and ratings?
5. Do you have related applications with other companies? Did you already hurt your chances of getting the best offer?
6. Will your client accept an increased premium?
7. Are there any avocation, financial, aviation or legal concerns?
8. Is the amount of coverage appropriate for the client’s financial situation?
9. Are there any sensitive histories such as alcohol, drug, or motor vehicle problems?
10. What is the importance of this client to you, such as being a center of influence which could provide referrals?
Last time, we covered why it is not a good idea to send eight or 10 trial applications out at one time. Doing so saturates the reinsurance market and results in activity codes at the Medical Information Bureau, both of which may hurt your chance of getting the best quote from the best carrier for a particular risk.
In the Laser Underwriting Approach, the preliminary application is completed for the brokerage agency. The agency’s staff underwriter then analyzes the request, reviews medical records and chooses the one or two best companies for that particular risk based on his or her knowledge of what companies specialize in certain risks.
The staff underwriter can give you an idea of what rating may be put on this applicant’s risk. The underwriter can tell you, for example, that your applicant’s health condition will probably result in a Table D rating, which essentially means that your client would pay double the carrier’s standard premium rate.
As agents know, applicants have very individual needs and reasons for seeking life insurance coverage. The needs could be as basic as putting children through college or as complex as making sure a large estate or profitable business is protected in the event of untimely death. The applicant has a preconceived idea of how much he or she wants to budget for the life insurance purchase. If the agent suspects the application is going to need to be a trial due to medical or other information disclosed by the applicant, it is important for the agent to educate the applicant about the possibility of increased premiums or table ratings.
That brings us to question number six: “Will your client accept an increased premium?” Your immediate reaction may be to fall into an adversarial negotiation role and think, “Absolutely not!” But remember, the staff underwriter is on your side. The staff underwriter wants to obtain the best rate for your client, just as you do.
So, with this question, the agent and staff underwriter can help each other. If the applicant is not willing to pay increased premiums, it is good to make the staff underwriter aware at this point. The staff underwriter could then work with the agent to figure a way to possibly still get a sale. First, the staff underwriter knows what company would probably give the best offer. Next, the face amount could be adjusted to make the premium increase not appear so daunting. A little increase may fit into the budget after all! On top of that, the staff underwriter can recommend other products with which the agent may not be as familiar.
Thus, we see that there are ways the staff underwriter and the agent can rescue a tough situation and turn it into a life insurance sale using the Laser Underwriting Approach.
Next month, we’ll discuss question number seven: Are there any avocation, financial, aviation or legal concerns?
Bob Pedigo, CLU, FALU, FLMI, heads the underwriting division at Davis Life Brokerage. Mr. Pedigo is the former Vice President and Chief Underwriter with Indianapolis Life. As the Vice President of Underwriting for Davis Life, he assists producers in navigating their cases through the sometimes rocky sea of underwriting. In addition to being available for consultation with agents on tough cases, he is an advocate in working with home office underwriting departments. In addition to his 30 years of underwriting experience, Bob also sold life insurance early in his career.