Note: This is the eleventh 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:
- What is your client’s medical history, including conditions, treatments, or medications?
- What is the amount of the application?
- What is your client’s age, tobacco status, height, weight, and ability to live on his or her own?
- Are you in competition? What are the other companies, face amounts, and ratings?
- Do you have related applications with other companies? Did you already hurt your chances of getting the best offer?
- Will your client accept an increased premium?
- Are there any avocation, financial, aviation, or legal concerns?
- Is the amount of coverage appropriate for the client’s financial situation?
- Are there any sensitive histories such as alcohol, drug, or motor vehicle problems?
- What is the importance of this client to you, such as being a center of influence who could provide referrals?
This month, we cover question number 10: What is the importance of this client to you? And related to that question is this: Does this case stand alone, or is it related to other current or future business?
As an insurance professional, every case you write is important, but we know that some cases are more important than others.
Let’s suppose that you are about to submit an application on a new client who happens to be the CEO of a mid-sized corporation. This case might be the largest case you will write all year in terms of its face amount and annual premium. But beyond that, you are also confident that successfully placing this case will result in more large sales from his corporation and from referrals he can make.
But – and isn’t this just so typical on an important case? – this particular client has a few medical issues. The revenue that could result from all those future cases hinges on placing this first case. Thus, it is crucial that this case be handled carefully and well, and that the agency you work with does everything possible to find that one carrier that will look past the particulars of this first application and see the big picture.
Fortunately, not all life insurance carriers have the same philosophy. Some will be able to look at extenuating circumstances. There are still some carriers that will recognize that they are in the same situation as you. If they take this case, they are in a much better position to get future cases as a result. But, of course, they need to have credible reason to believe that other cases will come in. On this matter, as with all underwriting matters, they will consider information coming from your agency’s staff underwriter to be more credible than information coming from the writing agent.
The staff underwriter will help you know what type of information to gather to help your cause. It will start with the specifics on your client. The carrier will want to know that the applicant is the CEO of a corporation, that the insurance covers a buy-sell agreement because of his ownership in the business, and that it also covers a key person risk since he is the only one who can keep this business running smoothly. The carrier will want to know complete details on your client’s medical history, compliance with any doctor’s recommendations, and quality of care.
But the staff underwriter and the carrier selected will also want to know what future referrals could develop out of this single application. Will this CEO provide for coverage for other key employees of the business? This CEO is clearly tied to many other business owners and operators outside his business. He has relationships with a raw materials business owner, a tool manufacturing and repair business owner, the owner of a large marketing firm, the senior officer of an accounting firm, and the senior partner of a legal firm. What is the likelihood of gaining business through referrals to these individuals?
Naturally, you can increase the likelihood of getting your important case placed if you also submit other applications related to it to the same carrier at the same time. That way, the staff underwriter can credibly point out to the carrier’s underwriter the relationship between these pending cases. The carrier’s underwriter will take into account that a decline on one case will in practice be a decline of them all.
Some carriers, of course, will not be willing to look past the particulars of this specific risk, and perhaps the applicant’s health conditions are serious enough that nothing can be done. But the staff underwriter will be able to analyze this and properly select that carrier that is most likely to take these potential future cases into account as it considers your current case. The staff underwriter will explain to that carrier’s underwriter – via a cover letter, a phone conversation, or both – the importance of the decision to be made on this application as it would apply to other quality business applications that are in house or may follow. The staff underwriter will also attempt to position the applicant’s medical issues in the best possible light.
In summary, for a case like this, it is important for the agent to be able to deal with a company that is eager to earn the business, and while it seems that there are fewer such companies each year, the staff underwriter will be able to pinpoint such a company. The carrier’s underwriter can then take into account the staff underwriter’s letter citing the likelihood of the placement of several large quality applications, which perhaps could cause the mortality risk to even out.
Next month, we will wrap up this series of articles with a summary of important underwriting ideas.
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.