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A Commonsense Approach to Disability Underwriting

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Producers who are new to the disability insurance market — and even some who have been selling the product for years — often believe that underwriting is an unusually high hurdle that they must clear during a DI sale. Fear not: There are many ways to navigate and even streamline the process.

While underwriting is a necessarily painstaking part of securing any protection for our clients, completing a DI application tends to be a more rigorous task than working through paperwork for other types of coverage, such as life insurance. Simply put, DI can put to the test our role as liaison between clients and the home office.

Producers play a very important role in the give and take of DI policy underwriting. We can make everyone happier by tailoring a safety net for our clients and doing good business that bolsters our company’s bottom line and generates long-lasting renewal streams. So how can we start doing that?

By stepping back and taking an objective view. Basically, life underwriting focuses on mortality — the actuarial predictors of a one-time fatal event that will trigger a claim — while disability underwriting must concern itself with a less precise topic: morbidity, or the many, many medical circumstances that can keep a policyholder from leading a productive life. There’s much more at stake in DI underwriting since claims can be paid out for a number of years.

The underwriters aren’t our adversaries, however. We’re trying to bring in business; they’re trying to make sure the insurer stays in business and writes profitable coverage. Bear that in mind the next time you’re going back and forth with the home office. At the same time, don’t overlook a few steps you can take to save time and secure the best coverage for your clients.

Be complete, be forthcoming, be truthful
There’s no way an underwriter will ever know every detail that was left off the application. In some cases, you may even want to write an additional cover letter to explain special circumstances. A stable client who has worked the same job for 20 years, for example, might seek the help of a therapist if, within the course of a year, one of their parents dies or they go through a bitter divorce.

Don’t leave room for an underwriter to discover a missing fact or an incomplete explanation. When underwriters encounter incomplete or unclear answers, they may become suspicious if they feel an applicant is not being forthcoming. With that in mind, you can direct clients to fill out HIPAA paperwork at their physician’s office to learn exactly what is happening. Face it: Medical documentation does not leave out the important details.

If we’ve taken the time to establish a trusting relationship with a client, one where it’s clear that we aren’t out to peddle product, our job can be a lot easier. A word of caution, however: Today’s prescription-for-everything mindset means that a surprising number of clients think nothing of taking a pill for any number of afflictions, from anxiety to high blood pressure. We simply have to impress upon them that all conditions have to be brought out in the open — even if they view them as unimportant or irrelevant.

Get the occupation right
The biggest mistake producers make in the process of a DI application is thinking they know what a client actually does as part of their job. Do your homework to obtain a precise and detailed description of a person’s occupation. After all, if you don’t understand, your underwriter won’t, either. A vague job title such as “rate lock setter” can throw a huge monkey wrench into the process and guarantees more back-and-forth with underwriters. Details (e.g., “My client is a rate lock setter — she determines the interest rates at which mortgage loans are sold”) make it easier to show which physical limitations or abilities would allow the client to keep working should they fall ill or suffer an accident.

Work with clients
After you’ve submitted an application and begun your discussions with underwriters, there’s a tightrope to walk. The process takes time — weeks, and sometimes up to a few months. While it’s important to keep in touch with clients, there’s no need to work up their anxiety levels over the matter.

Next month may be Disability Insurance Awareness Month, but take this year-round advice: A little foresight, a bit more work up front, and some candid talk on your part will not only help to smooth things out with clients and underwriters — they’re also best practices that will make your business across all product lines more rewarding and more profitable.

Candida A. Friedman is a disability income specialist for National Financial Network LLC, an agency of The Guardian Life Insurance Company of America. She can be reached at [email protected].


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