|
ONLINE EXCLUSIVE: Tackling the Underwriting Process the Right Way Back to Articles of Interest Author: Shannon Brennan, CLU®, ChFC Those not well-versed in the insurance underwriting process often find it confusing. It can be long and complicated, and when it ends with an applicant receiving an unexpectedly low rating, it can lead to feelings of frustration and disappointment. In such cases, it is not uncommon for the advisor who submitted the application to remark that the client had “appeared” to be in superb health.But underwriting is more than a matter of risk related to health problems; myriad other factors come into play. In addition to current health and medical history, underwriters take into consideration an applicant’s income and lifestyle, his or her family medical history, and his or her hobbies—some of which might be hazardous, such as certain recreational sports. These recommendations can help you manage client expectations regarding the underwriting process and its potential outcomes. SET REALISTIC EXPECTATIONS When requesting a quote from a carrier, it may be tempting to run it at the best rate class available, which would mean the least expensive premium for the buyer; however, most clients don’t qualify for this classification. This category carries very stringent health qualifications and is reserved for those who are expected to live longest and who are in the very best health. In addition, if a client’s expectations are high, and if the underwriter delivers an offer for a standard rate class at a higher-than-anticipated premium, the client could balk at the cost and decide against purchasing the policy. The alternative is to run the quote more conservatively, at standard rates, and if the client is fortunate enough to receive a better offer, the good news would be easy to deliver. Running an illustration based on a standard rate won’t put the client at a disadvantage or prevent him or her from getting a higher rating. The client will receive what he or she qualifies for—regardless of the classification illustrated. Be sure your client has realistic expectations regarding how long it takes to underwrite a policy. Four to eight weeks, or longer, is typical, depending on how quickly the client schedules the appropriate medical exam, whether or not physician records are needed, and how long it will be before the physician’s office releases the required records. Moreover, when it comes to releasing records, some physicians require their own medical authorization. Having the client complete and return the authorization in a timely fashion will expedite processing. If the records take an exceptionally long time to acquire, a phone call from the client to the doctor can also expedite things. BE THOROUGH To ensure the application is processed in the most efficient manner, be sure that you are licensed and appointed before submitting the application. Another tip for preventing unnecessary delays is to be sure the application is completely filled out before you submit it. Missing information and signatures can delay an application, and, until it is complete, the underwriter cannot look at the case. Other information often overlooked includes full names, addresses, and phone numbers for doctors seen in the previous 10 years. You should also include the reason the client saw the physician, as this will help the underwriter decide whether or not physician records will be needed. Lastly, be sure the client promptly schedules his or her medical exam. DO YOUR HOMEWORK—AND HAVE CLIENTS DO THEIRS Although filling out the nonmedical portion of an application (i.e., Part II) is not necessarily required, completing it will help expedite processing. Working with a client to get answers to the questions posed here is also a great way to open a candid conversation with your client about his or her health. Be specific and gather as much detail as possible, using open-ended questions. If you uncover any health conditions, be sure to note them. The more details you can give an underwriter, the more accurate his or her opinion will be. You also want to ensure that the client prepares for his or her paramedical exam. In addition to advice like drinking plenty of water, getting enough sleep, and scheduling the exam early in the day, remind clients about information they should have available at the time of the examination, such as their photo ID, the names and dosages of any current medication, and information about their current health insurance.
INCLUDE A COVER LETTER It is often helpful to include a cover letter with the application. Because an insurance application is very objective and factual, the cover letter is your opportunity to present the underwriter with pertinent information that may not be apparent from reading the application. The cover letter can alert the underwriter about key issues that may affect the insurance purchase; it can also prevent the underwriter from being surprised by adverse findings that may surface as the process continues. In addition, the cover letter enables you to highlight some positive lifestyle variables about the client. For example, if the client is making healthy lifestyle choices—eating right, exercising, or seeing a doctor regularly—some carriers offer incentives and “credits,” so the client can obtain more favorable rates. LOOK AT ALTERNATIVES If, in the end, the client receives an offer from the carrier with which he or she is not happy, or a medical condition shows up that wasn’t expected during underwriting, a signed HIPAA authorization form may serve as a helpful tool for finding another, more favorable carrier. In the event that the client is not a good candidate for a new policy, you may want to help him or her evaluate other options. If, for example, the client has a term policy that is still in force, it may contain a conversion option, which allows the client to exchange it for a permanent policy without further underwriting. Other policies that the client owns may include a guaranteed insurability option, which can be exercised. If the client’s spouse is insurable, it may make sense to consider a survivorship life policy. KEEP THE LINES OF COMMUNICATION OPEN Although the underwriting process can be challenging, talking to clients about it can help put them at ease. Being thorough and complete will help prevent potential delays and can make the process go more smoothly for you and your client. Shannon Brennan is the supervisor of insurance operations. She is available at x9203 or at sbrennan@commonwealth.com. |
 
|
|