It’s a scenario that may be familiar to you: You and your client have decided to apply for an individual disability insurance (IDI) policy. You have the client’s signature; the application is submitted. You’ve worked with your general agent to ensure the application is ready for underwriting, and you feel good knowing you’ve helped your client realize that income is an asset worth protecting.
While most of the hard work has been done, the sale is not complete just yet. That’s because the next step on the IDI sales journey is underwriting, and IDI applications require underwriters to review a significant amount of documentation — such as medical history and financial statements — before an application is approved.
My underwriters and I are often asked how producers can help ensure their client’s application is well-received by underwriting. In my experience, optimal IDI underwriting requires preparation on the part of the producer, who needs to set expectations early for clients.
Whether you write one IDI policy a year or are a genuine IDI expert, here are five tips that may help improve your experience.
1. Rely on a trusted resource.
General Agents are a great resource when selling IDI as they can help ensure you are prepared for the sale and how to set client expectations. General Agents are experienced, knowledgeable experts who can help you navigate the sales and underwriting processes, including how best to connect with your client and prepare him or her to provide the information that’s needed.
2. Know that not all underwriting is created equal.
Some producers assume that the underwriting process for IDI is similar to that of life insurance products. However, IDI requires a more detailed process because a different type of risk is being assessed.
To assess a client’s insurability for IDI, carriers need not only detailed medical history, but also a clear picture of your client’s financial and occupational history. IDI underwriters are investigating a person’s risk of becoming disabled, while life insurance underwriters are looking for conditions or activities that may increase the risk of death. Because the chance of becoming disabled before age 65 is greater, and the policies could potentially pay out large amounts over a long time frame, it’s important that the carrier does its due diligence to ensure that your client’s application has been thoroughly analyzed.
That’s why you may be involved in requests to help obtain the appropriate records and documentation. It’s important to prepare your clients ahead of the sale for the amount of personal information (think: medical history, financial statements, medical testing and job history) that will be needed for the carrier to analyze.
3. Just because you’ve taken an application doesn’t mean you can move on.
A good number of IDI policies aren’t issued as applied for. That’s because your clients may have injuries or medical conditions that could prevent them from receiving full coverage.
This type of approval is known as a modified offer. This is another area in which your General Agent can help you relay this information to your client. It’s imperative as a producer that you help set expectations early about the objective of the underwriting process, the documentation that’s needed, and how IDI policies aren’t always a straightforward purchase. Your General Agent should have tips on how you can approach this often delicate subject.
4. Present all documentation as soon as feasible.
Most carriers have a list of all the information needed when submitting an IDI application. While it may feel like a laundry list of information, submitting all the documentation needed in a timely manner is crucial to ensure a policy is approved. Your General Agent often can help with ways to streamline this process and make sure you are getting the right information from your client up front.
5. Write a cover letter.
Submitting a cover letter with your client’s application is a great way to provide the carrier’s underwriters with an overview of your client and provide information that may not be gleaned from the application. The cover letter should provide details of your client’s medical and financial history, as well as context around his or her occupational duties or employment history. The cover letter helps underwriters have a better understanding of the applicant’s history and potentially reduce the number of questions asked by the underwriter — which can lead to a quicker and more efficient underwriting process.
Above all, it’s important to work with an IDI carrier who helps evaluate every applicant to provide the best possible offer. While the underwriting process may seem extensive, the process hopes to ensure that your client has the best coverage at the best price to help protect him or her if an unforeseen illness or injury arises.