Since life insurance underwriting is an imperfect ‘science,’ it offers both opportunities for surprisingly good outcomes and disappointing setbacks. It’s well known that one company’s good risk is another company’s decline or highly rated case.
Because of the potential disparity in responses to a case, advisors are faced with the daunting task of aligning a particular client’s case with the right company with the right product at the best price and underwriting available.
To further complicate the task, it’s increasingly necessary to shop the client’s file to achieve this objective as insurance companies continue to fine-tune their underwriting using highly sophisticated and continuously evolving data and analytical techniques.
Of particular importance to advisors and their clients are the many changes that affect client underwriting, specifically where there was prior underwriting with adverse results. Those results may or may not have been appropriate at the time, and the policy may be in force or not taken.
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Fortunately, there are favorable conditions today for advisors to present their clients with ways to improve a prior life insurance result, each one offering underwriting enhancements sufficient to overcome the prior adverse insurance underwriting decision.
1. A client’s medical status
It’s incumbent upon advisors to take seriously today’s opportunities to review their inforce policies, including rated policies, and previously rated offers. And here’s why:
- It’s quite possible that a client’s medical status can improve with the passage of time.
- In the same way, a medical condition can stabilize, opening the way for an enhanced offer.
- This also applies to the improved stability of a particular diagnosis.
- Aggressive and successful treatment can improve a medical condition leading to new, more favorable offers.
- Positive changes or improvements in testing and lab results can lead to a better offer.
- New (previously unused) testing may come to be introduced by the client’s physician or requested by an insurance company to obtain a better offer.
2. The insurance company outlook
Life insurance companies are far from static when it comes to their mortality experience. Most companies review their actuarial history annually with their reinsurers to evaluate the results, and they adjust to new medical treatment realities and the implications for mortality enhancement.
3. Medical and technological outlook
Life companies are continually coming up with new medical testing that is helpful in underwriting. At the same time, clinicians have new access to new medications, advanced testing, state-of-the art diagnostic tools and comprehensive medical care which, when taken together serve to improve patients’ health prognosis, longevity and mortality.
Although many in our industry view life insurance companies as staid and stodgy, they agonizingly crunch numbers, along with their reinsurers, to evaluate, catalogue and to assure profit margins, as well as offering the most competitive underwriting.
4. Insurance company niches
Each life company has its own unique underwriting approach. This means they can and do view the same set of medical information differently, even quite differently at times. For example, one company may see a set of facts indicating a particular impairment, while the next company, reviewing the same facts, does not have a problem. This is not a matter of the way underwriters from two companies perceive the same information. The difference depends on the individual underwriting positions of the insurance companies involved.