Compared to the attention that the life insurance industry gives to medical underwriting, financial underwriting may seem less important, something like ‘the little finger on the left hand’. But what happens on the medical side goes a long way in determining whether a client’s application is accepted, rejected, or rated.
With so much focus on obtaining detailed medical information, many advisors may view financial underwriting as more procedural, a lesser hurdle, and not a serious cause for concern.
If a producer feels this way it’s unfortunate. Since financial underwriting can play a key role in determining the outcome of a case, along with medical, product and quality issues, it deserves serious attention, starting with the selection of the insurance company.
Each insurance company has its own algorithms that help in determining the financial need for the requested coverage; therefore, it’s essential to understand a company’s formula so that the case can be constructed appropriately.
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In the due diligence (or investigative) phase, the objective is to develop a clear understanding of the financial underwriting possibilities. One way to gain insight into the thinking of a company’s underwriting department is to speak with someone in the company’s advanced marketing unit to develop an understanding of what can work when making a presentation.
Here are ways in which advisors can contribute to obtaining the desired coverage:
(1) Ask the relevant financial questions. No presentation should be drafted before obtaining as many relevant financial details as possible pertaining to the history, objectives, and purpose of the desired coverage. All of this goes into building the best possible case for obtaining the requested coverage.
To do this means asking questions and getting accurate and complete answers, just as it does with medical underwriting issues. Needless to say, this can become somewhat problematic unless there’s excellent communication between advisor and client.