Note: This is the eighth 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?
In the Laser Underwriting Approach, the preliminary application is sent to the brokerage agency where the staff underwriter reviews your case. The request is analyzed, the medical and financial records are reviewed, and then the best one or two companies are selected that fit your client’s particular risk.
There is always the current list of facts that the staff underwriter reviews (i.e. age, amount, medical risks, smoking status, etc.). These are all things directly presented on the preliminary application to the agency. Other matters that are crucially important, yet are often not asked on the preliminary application, are summed up in the question: Are there any avocation, financial, aviation, or legal concerns?
Let’s look at each of these concerns.
Avocation: Examples of hazardous avocations are mountain climbing, bike racing, diving, boxing or auto racing. With a hazardous avocation, the staff underwriter is going to want to know the avocation, how experienced the client is, and the how often your client does the activity.
Let’s take mountain climbing, for example. You will want to ask your client: Where do you climb, how often, and how high? If your client is a professional in the avocation, the frequency and hazard are usually very high. Such cases more than likely will require the papers to be sent by the carrier to a reinsurance company. Thus, it is a good idea to call the staff underwriter and have them help you with the type of client you are writing.
Financial: If your client has had some financial difficulties, it is important for you to get details. Financial difficulty could range in severity from being unemployed, to foreclosure, to past or currently pending bankruptcies. As you can imagine, these factors affect the risk, and the staff underwriter needs a full set of facts to help you best place the case. For example, the underwriter will be interested in the circumstances or the cause of the bankruptcy and what your client is doing to correct the situation. Be specific with your details. Most companies do not issue coverage until the bankruptcy has been discharged.
Aviation: There are many guidelines for aviation, and aviation may or may not result in a rating or an extra premium. Professional pilots for major commercial airlines are typically not assessed any extra premium for aviation. Amateur, charter and helicopter pilots may be a different story. The underwriter will be looking for the type of aircraft flown, how many solo hours a pilot has flown, how many hours the pilot flies in a year, and if the pilot has an Instrument Flight Rating. It is good to contact the staff underwriter first to see what kind of rate the risk may have.
Legal: If you pick up on a legal situation, get details such as: What was the charge? Was jail time served, and if so, how long? Is the client still on probation? Is the client back in society with a steady job and/or family?
One example is an applicant who is now 45 years old and was arrested at the age of 18 for selling marijuana. He has had the same job for the last 15 years, has three children, and is a good part of the community. It is good to have a cover letter and drug and alcohol questionnaire for this client, but the carrier will probably have no problems insuring this individual.
Another example is person who is now 35 years old and served jail time in his 20s for trafficking cocaine and forging checks. Even if he has served his jail time and is finished with probation, many companies would put on a substantial rating. It would be very important to contact the staff underwriter to see what could be done in such a situation. A cover letter possibly covering all the positives on this person and where he stands in society now would be a good start.
All this comes back to the Laser Approach to underwriting a trial application. If a staff underwriter can assess the risk first, suggest the one or two best companies to receive the trial application, and assist you with gathering records and packaging the information properly, there is a better chance of being able to place your application.
Next month we will discuss question number eight: Is the amount of coverage appropriate for the client’s financial situation? You will learn how underwriters view such financial matters as the applicant’s employer, occupation, income and net worth.
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.