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Win more premium cases with ‘reverse underwriting’

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Too many overeager agents ditch premium cases in excess of $30,000 on the side of the road because of poorly executed impaired-risk and financial underwriting

For agents involved with trust-owned life insurance, insurance portfolio reviews or those focused on senior markets, sticking to fundamentals still works.

Cases beyond the cut-and-dried 20-year term on healthy 40-year-olds are usually table-rated or declined because:

  1. Proposed insureds misrepresent;
  2. Applicants are financially unqualified or exercise risky judgment. 

So, what’s the near-foolproof solution? How about the seldom mentioned, but ever-powerful, preliminary underwriting

Lee Perkins, regional manager for Ash Brokerage with 20 years of experience in complex case design on behalf agents nationally, was asked to share what keeps him ahead of the curve. 

“When most producers get an opportunity to compete on a substantial case, nine out of 10 lose it before the process even begins. They price the market for the lowest cost product and make the client presentation from there.” 

This is bad for two reasons:

  1. A formally declined application creates a negative MIB record;
  2. Declined status also taints the potential reinsurance market on bigger premium cases. 

Perkins recommends a more efficient methodology:

  • Gather info with a preliminary application — All relevant information – medical, financial, in-force coverage, policy-ownership details, etc. – should be collected in an orderly fashion. 
  • List out all medications and physicians — A majority of the large six-figure (target commissionable premium) cases involve proposed insureds over 60. Often they have multiple specialists and surgery records going back for years.
  • Produce an underwriting evaluation — Securing accurate underwriting offers is mission critical. Big cases have a 300 percent higher placement rate with a professional underwriting evaluation. 
  • Package the case details and submit informally to appropriate carriers — Be forthcoming as to the case’s merit. Never wait for an underwriter to start asking for obvious information, Perkins says. 
  • Assess tentative offers — Some will request a recent attending physician statement (APS). Other insurers will shave tables. Producing accurate options requires an accurate informal quote.
  • Compare illustrations for carrier pricing and performance — Not every policy is an apple to apple comparison. “A diligent producer is looking at crediting rate, guarantees, surrender penalties and the like,” Perkins says. “Sometimes we split a jumbo policy into two smaller ones of equal coverage as a reinsurance consideration.” 

“In 27 years life underwriting, ‘reverse underwriting’ results in the most sustainable, consistent outcome for the large-case client,” Perkins says. 

However, there are some potential hazards to be aware of. 

The irony behind many big-ticket life and long-term care cases is that a great number of applicants try to purchase both only when there exists a legitimate reason they potentially cannot.

There is a reason top general agents like Bob DiMeo maintain staying power over time. With three decades of insurance design and risk management expertise in his competitive Southern California marketplace, the Crump managing director was asked to share his preliminary underwriting playbook. 

DiMeo’s prescription for a near-seamless, fast policy placement process involves just two key elements:

Leverage Internal Resources

“High net worth clients are more sophisticated and require more logistical details than in the past. I tap into on-staff attorneys for complex situations such as trust-owned insurance, buy-sell agreements and split dollar arrangements,” DiMeo says. 

Staff underwriters with insurance carrier experience are important in big transactions with moving parts and lots of medical records. 

“I address potential issues by procuring additional medical testing where necessary,” DiMeo adds. “This technique clarifies questionable circumstances for insurer underwriters much of the time. 

“If Type 2 diabetes with early onset is regularly monitored and ‘controlled’ with no kidney damage, for example, our consulting physician will source a favorable letter from the insured’s physician saying so.” 

Be Persistent

A detailed explanation of potential problem areas can avoid more intrusive health and financial questioning right before policy approval. 

“In a financial statement, for example, property addresses and solvency statements from an accountant, attorney or trustee can avoid roadblocks and move the process along,” DiMeo concludes.

Independent agents want to align with a good field marketing organization or general agency with carrier-trained underwriters and technical experts on staff. One that can interpret electrocardiograms and lab results is a good start. 

Applying these preliminary life and long-term care underwriting tips translates to overcoming issues before they become rated policies, declines and MIB inquiries on a client’s permanent record. 

This results in placing more business faster and seamlessly.

DISCLAIMER: *Crump does not provide tax or legal advice. While Crump’s attorneys review trusts and other documents, they are not acting in the capacity of counsel to the insured.


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