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August 29, 2013 at 03:29 PM
Every advisor has cases where the need is very clear. The benefit and coverage period is certain. The client has no health issues or special circumstances and all that needs to be done is to run a spreadsheet to show the client a handful of companies and their rates. The client picks one, the app is taken and the underwriting process goes smoothly.
In a perfect world, every case is this simple. In the real world, many clients offer unique challenges where the answer is not that easily identified. In these cases, you need to be creative and think outside the box if you’re going to arrive at a solution that solves the problem and leads to the sale.
Case No. 1: High premium
Consider this example: Your client is somewhere from age 55 to 70, and has been offered a mild rating for a term life policy you applied for. The premium is much higher than you or the client expected. What do you do to salvage the sale? One solution might be to consider a permanent plan with a carrier that offers table shaving. Yes, the term rates could be a little higher, but you could save time and energy by not needing to take the business to another carrier. Alternatively, if the term need is long enough, a standard rate on a GUL or even a current assumption UL plan could offer a lower premium outlay, as well as a longer protection period. Some carriers even offer rolling targets that generally aren’t met by the first year premium when the UL plan is being designed to look like a level term plan.
If the sale has to be made as a term policy, consider a company that would offer a reduction of a table or two based solely on the client’s lifestyle, regardless of the medical reason for the table rating.
Case No. 2: High risk
Here’s another example: Your client is a private pilot, and, based on her aviation activity, she could face a flat extra premium of $5 per thousand or more. You could consider an aviation exclusion, but, in many cases, the client doesn’t want to be exposed for this risk. An alternative would be to supplement the life sale with an accidental death policy that would cover an aviation event. Generally, these can be purchased for just a couple of dollars per thousand — much less then what most aviation flat extras would cost. With some companies, the base underwriting class can be improved when an aviation exclusion is added, so the client will get a better base rating and be covered for the avocation at an overall lower cost than paying the flat extra premium. In the event the client dies from an accidental death other than private aviation, both polices would pay off.
Case No. 3: Chronic illness
Many clients struggle with trying to insure their children when they have chronic illnesses. Insurers do not like to cover them until they reach their late teens or early twenties, if they are even insurable then. Consider insuring a parent and adding on a child rider that is not underwritten. When the child reaches the end of the rider period, they can convert the benefit for a multiple of the rider amount at standard rates. The caregiver should always have coverage so that the client will have resources to care for the child should a premature death occur.
