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The Laser Underwriter Approach yields accurate quotes and keeps the processes smooth by asking these 10 key questions:
1. What is your client's medical history, including conditions, treatments, or medications?
2. What is the amount of the application?
3. What is your client's age, tobacco status, height, weight, and ability to live on his or her own?
4. Are you in competition? What are the other companies, face amounts, and ratings?
5. Do you have related applications with other companies, such as rolling over a policy or a 1035 exchange?
6. Will your client accept an increased premium?
7. Are there any avocation, financial, aviation, or legal concerns?
8. Is the amount of coverage appropriate for the client's financial situation?
9. Are there any sensitive histories such as alcohol, drug, or motor vehicle problems?
10. What is the importance of this client to you, such as being a center of influence which could provide referrals?
It's a good day when your trial application takes another swift trip through underwriting. After the staff underwriter reviews the above 10 questions, the application is sent to one or two companies that are best equipped to give you the most favorable offer and the quickest response. The Laser Underwriter Approach for trial applications can definitely prove to be beneficial to you, the producer.
As we continue through the 10 question series, we will now discuss the third question: "What is your client's age, tobacco status, height and weight, and ability to live on his or her own?" The answers to this question can give more information than meets the eye to the staff underwriter, and to the company underwriter assigned to your trial application. Here's how:
The client's correct age immediately shows the staff underwriter what thought process will be used, and what questions they will need to have answered. If the age of the applicant is a young child, the underwriter will want to know: Do the parents have coverage? If so, how much, and how does this coverage compare to that being requested on the child? Do siblings have the same amount of coverage? Lastly, does the child get normal well baby checkups and immunizations?
If the applicant is a teen, questions could be: In addition to the coverage questions above, what is the teen's driving record? Is there any alcohol or drug use, or any hazardous activities?
For adults the underwriter would want to know: What is a reasonable amount to be applied, based upon their income, potential future earnings and net worth? What is the medical history?
For older-aged applicants: What is the purpose of the coverage? What are the actual needs versus the speculation of needs? Are they active and can they perform activities of daily living? (See below.) Are their cognitive abilities good? The lab values are also looked at closely because these values mean different things in an elderly adult as opposed to a younger adult. For example, low albumin might indicate malnutrition in an elderly adult. A younger adult having a low albumin is usually found to be normal and healthy.
The tobacco use question is extremely important, not only for current use, but for the history of tobacco use as well. Because tobacco is a leading cause of many impairments such as heart disease, cancers and chronic lung disease, the staff underwriter will want to know details about the history. What types of tobacco being used is also important. Cigarettes are known to cause lung disease and heart problems. Chewing tobacco can cause several types of mouth and throat cancers.
How often tobacco is used is also an important detail. The more tobacco is used on a daily basis, the greater the risk. For example, a two-pack-per-day smoker is at higher risk for impairments than a half-pack-per-day user.
If a person quits using tobacco, studies have shown that immediately upon quitting, the blood circulation increases, and blood pressure and heart rate quickly improve. Within a few days, breathing becomes easier and the senses of smell and taste return. After two or three months, lung function can improve up to 30%. After a year, heart disease can be reduced by 50%. Fifteen years after quitting tobacco, the risk of heart disease is the same as a person who never smoked.
The correct height and weight is important on the trial application because it gives the staff underwriter an idea of what impairments may appear with increased weight. So many conditions such as diabetes, elevated blood pressure and heart disease are directly related to increased weight. This is very similar to the tobacco question. Elevated weight and tobacco use, of course, put additional risk on the applicant. The possibility of dual risk for increased weight and tobacco use becomes evident with medical records secured by underwriter. Knowing the additional risk gives the producer a heads up.
The final part of this question: Does the applicant have the ability to live on his or her own? Does this person need help with any activities of daily living? This means bathing, toileting, dressing, eating/preparing meals, or ability to walk or drive a vehicle. Are they involved in outside activities such as church or clubs? The underwriter will be looking for vitality in living versus a frail lifestyle.
Understanding the importance of these detailed questions will help you in working with your clients and keeping a speedy track record for getting applications processed.
Next month, we'll discuss question number four: "Are you in competition? Who are the other companies, face amounts applied for, and ratings already given?" Next month we'll find out just how important these details can be.
Bob Pedigo, CLU, FALU, FLMI, heads the underwriting division at Davis Life Brokerage. Mr. Pedigo is the former Vice President and Chief Underwriter with Indianapolis Life. As the Vice President of Underwriting for Davis Life, he assists producers in navigating their cases through the sometimes rocky sea of underwriting. In addition to being available for consultation with agents on tough cases, he is an advocate in working with home office underwriting departments. In addition to his 30 years of underwriting experience, Bob also sold life insurance early in his career.
