Allan D. Gersten, CLU, ChFC, CFP®

Declined doesn’t need to be the last word—and that’s good news, particularly with the steady increase in impaired risk and other difficult cases. In many instances declines can be avoided, and there’s a good possibility that even when one occurs it can be brought back to life. Here are five guidelines for keeping difficult cases on track:

1. Proper case presentation
The most successful strategy for positioning a life insurance application for submission to a carrier is to know the client. If this seems like an obvious rule, it’s also one that’s often broken or ignored.

Unless the broker obtains all the essential medical and financial underwriting information from a client, the case is put in jeopardy from the start. Granted, there are times a broker is either unable to get correct information or to get it in sufficient detail to properly state the realities of the case. Yet, without accurate and complete data for the application, a broker can’t expect to prepare a cover letter that makes a compelling case to an underwriter.

But there’s good news: This doesn’t necessarily need to be the last word. With a skilled and more robust resubmission of a case to either the same carrier—or more likely a different carrier—what was destined to be a disaster can be transformed into a positive outcome. Even so, here are ways to avoid unnecessary declines:

• Avoid getting it wrong. In too many cases, brokers don’t know what they don’t know. A client may not volunteer pertinent underwriting information which results in a surprise decline. For the most part omissions are usually unintentional…simply thoughtless. All it takes to avoid this is a clear understanding between client and broker as to the realities of what can short-circuit a case.
• Avoid client misstatements. Inaccurate factual information can cause a declination or adverse modification of a carrier’s offer by undermining the carrier’s confidence in the client’s veracity. Many times clients don’t know or fully understand the medical issues that confront them. As we all recognize, it’s not uncommon for clients to be in denial regarding their medical impairments.
• Avoid missing pieces to the file, such as answers to the client’s medical status. Needless to say, unanswered questions can cause declinations when the underwriter lacks complete and needed information for making a positive decision. Most missing information involves gaps in the medical file when the client does not mention seeing a physician or having a procedure. Collecting the medical file can be a challenge. Old records and those from multiple physicians, facilities, or hospitals can be difficult to locate or obtain given their age. Also, when some doctors retire their files are no longer available. The missing pieces come to light when an underwriter requests sequential aps and then compares the information.

2. The client’s health status has changed since the original application was taken.
This occurs in an increasing number of cases, so brokers should be aware of these issues:

• The client may have completed an outstanding test that clarified the risk status and prognosis.
• Completing a needed procedure may solve a problem that was a risk in itself or presented a risk inherent in general surgery such as anesthesia, clotting, etc.
• Time passed and revealed less concern over a particular medical impairment. The client’s risk factors did not develop as feared. A part of this relates to medical and technological developments that help to address and solve previous medical concerns. An extreme example is Hepatitis C. Formerly a sure declination, clients can now secure standard or preferred risk underwriting due to a new protocol to eliminate the disease.
• Controlled prior conditions were not under control, such as blood pressure, cholesterol, obesity, blood sugar, and liver functions. Control and stability are important and when seen, the underwriter can reverse former declinations.
• Exercise can address a medical concern for some of the risk factors and reverse a prior declination. It is critical and gratifying for everyone, including the underwriter, to see cases in which insureds have reversed a problem and turned their health prognosis around.

3. Changes in insurance company ratings and offers
There’s nothing static about insurance carrier underwriting today; it is evolving at a rapid pace, influenced by three notable trends:

• Medical breakthroughs for various impairments.
• Technological improvements in assessing cases.
• Access to previously unavailable and often obscure historical medical information that allows cases to obtain offers that were not possible in the past.

Taken together, these developments are making it possible for carriers to liberalize and enhance ratings and offers.

4. Alternative solutions and products
These can address existing medical problems with a more creative or aggressive underwriting approach. For example, term products with ratings up to 20 tables can potentially solve problems where offers were not available. Also, simplified and guaranteed issue products can be stacked when a difficult risk can qualify for these more liberal, but pricey offerings. Sometimes, a limited duration term plan will underwrite a case for one or two years.

While the products and pricing may not be optimal, there are situations when coverage can be made available for motivated clients with risk factors that are outside the box.

5. Underwriting: a human profession
A typical large case file can comprise hundreds of pages, all of which an underwriter (a human being) must read, understand, interpret, compile, categorize, and relate. Underwriters, like everyone else, have differing learning styles, intellects, and abilities when it comes to attention to details. All of these can come into play in one way or another, creating both challenges and opportunities. 

All this points to the fact that the review of someone’s application and medical file can generate a wide range of offers, which are influenced by the company itself and the particular underwriter’s knowledge and experience.

For example, a recent case summarized a PC RP pathology report with an initial carrier quote as a probable standard non-smoker offer. The application was submitted, along with the carrier’s quote response. Incredibly the carrier declined the formal case, stating that the facts in the full file differed from the summary.

Push back with the carrier yielded the response that the pathology report showed more problems than were in the summary and, further, that the pathologist’s assessment of the tumor rating was incorrect.

Pushback again. This time, armed with a brokerage review of the report, it was clear that both the senior underwriter (the one who originally reviewed the case) and his superior (a chief underwriter) had misread the punctuation in the pathology report summary which, consequently, resulted in an incorrect meaning to the report causing the case to be declined by both underwriters. Fortunately, fresh eyes and a critical review made the difference and this prostate cancer case was issued at standard nonsmoker rates.

All of which suggests that maximizing the possibilities of each case requires overcoming challenges with a disciplined, fact-based and persistent approach that pays attention to details and stresses open communication every step of the way.

Impaired risk underwriting isn’t what it used to be. Advances in medical technology, big data, and information sharing are transforming it from a 1970 Plymouth into tomorrow’s Tesla.

The dramatic changes are ushering in new processes, assisting with creating enhanced metrics, and opening the way for underwriting methods that are innovative, refreshing, and far-reaching—for both clients and advisors.

Enormous strides in medical technology are making available new and improved clinical testing, evaluation and diagnosis. Couple these striking enhancements with improved underwriting knowledge and understanding, and life insurance underwriters have the ability to make better offers. 

Following is how these methodologies contribute to improvements in IR underwriting.

Use of prescription database
Using this database can help determine the reality of a client’s medical status without ordering an APS. This can be helpful when it’s unlikely that an APS review will add significant additional information. Quite often an acceptable offer can be made when it seems that there is relative clarity in the client’s medical status. 

Use of big data
Information pertaining to a client’s habits, lifestyle and status that may or may not add up to various risk factors is now instantly available. Access to this information can be invaluable for both simplified and full underwriting, as it provides information on the risk that was unavailable or difficult to access previously. 

Use of interviews, Internet, MIB and Consumer Files
Taken together, these four factors are critical underwriting components. Use of the Internet helps to ferret out lifestyle evidence that can contribute to making or breaking a case.

MIB searches and personal interviews have long been used and are still key components in building the client’s file. Access to various other databases can provide the underwriter with information that was difficult or impossible to obtain previously. These information sources speed cases along and help to minimize underwriting requirements.

Use of a wide variety of manuals
Historically, companies would use a single manual to assist in assessing a risk. Some larger life companies had proprietary manuals built for their use. Now, it’s not unusual for companies to have two or three manuals. And several companies have four manuals for risk assessment.

Using strengths from each of multiple manuals can make for very aggressive offers with competitive pricing that can mean the difference in placing the case or not getting the business.

Use of up to date medical research and testing
There is an accelerating trend in the quality of diagnostic tools for underwriting such major risks as cancer, heart disease, and diabetes that helps clinicians and underwriters recognize and classify the medical issues patients and proposed insureds are facing.

New medical and drug treatments that are continuously coming on line have also accelerated the pace with which patients’ health outlook, status, and prognosis can improve.

Carriers have removed requirements for echocardiograms with many substantially reducing their requirements for an EKG, and substituting the NT-Pro BNP blood testing at certain ages.

All of these factors have a positive effect on mortality and help the underwriter make offers that are better than ever. 

Underwriting personal habits  
The outlook for improvements when dealing with personal habits remains a mixed bag:

Alcohol abuse. The position of life carriers regarding alcohol abuse is relatively unchanged. A mild or moderate abuser can secure a mild or moderate rating. Anything more severe typically will be rejected, requiring a number of years of sobriety and abstinence to obtain an offer. In addition to the use of the APS, driving records, and interviews, there are multiple lab markers used to help in evaluating the applicant’s usage.

Addiction and abuse of narcotics has become more prevalent and is challenging when making offers. Offers are made, but the compliance and control are important. 

Underwriting Marijuana and cigar usage continues to improve so that preferred nonsmoker offers are available.

Driving Under the Influence. The circumstances, occurrence dates, current habits and particular carrier niches all impact offerings. In other words, the details are important.

Hot areas with recent improvements in offers:

• Seniors—over age 70 now available with multiple credits; better with acute coronary syndrome.
• Sleep apneas. Some are now available at preferred rates
• Asthma. Can secure preferred rates.
• Prostate cancer. Using watchful waiting over age 65. Previously uninsurable clients can now get standard ratings.
• Hepatitis C. Using new drugs, previously a declination or highly rated can be cured. These clients can now secure standard or even preferred rates.
• Cancer. Certain cancers can receive preferred nonsmoker treatment.
• Diabetes. Preferred rates are now possible for an increasing number of well controlled diabetics.
• Heart Disease. Single vessel coronary artery disease can get preferred nonsmoker rates.
• HIV. Clients with HIV can now get offers from a number of companies. This is an example of companies considering a previously uninsurable medical scenario because of historic data and medical advances.

All in all, more insurance companies are improving their rate classifications for a variety of risks. This is due to improved mortality data, as well as treatment protocols that are more promising for patients’ long term health.

Companies have developed mathematical algorithms to determine where they can speed up the underwriting process, improving costs while they are saving time. The life insurance industry has been trending toward doing less testing, particularly where blood and urine tests are no longer needed. 

They have also downgraded the need for a physician’s exam to a paramedical exam, and more often we can expect to see downgrades to no exam at all. Simplified underwriting can use automated underwriting techniques to make offers that range from preferred classes to clients that get offered policies with moderate ratings.

Projections for future trends

• There will be an acceleration of use of new and improved testing by both clinicians and insurance companies to help improve mortality.
• Companies will find more pathways to avoid ordering attending physician statements, relying on personal health interviews and searching various databases for relevant information. However, some companies are avoiding personal inspections and gathering what they feel is sufficient information from various databases.
• Predictive modeling becomes more important and more useful in evaluating mortality than ever expected.
• More companies will avoid using EKGs.
• Companies will have their own unique methodologies for evaluating labs.
• Medical breakthroughs will allow better mortality and offers where previously there were none.
• More clinicians working with gene testing are having an impact on client offers.

It’s becoming clear that companies will be relying on their own resources to refine their modus operandi in underwriting a case. This means they will make good, profitable offers while maintaining an appropriate and workable market share.

Life insurance companies will find advanced selection techniques that save time and money. This is good news for advisors and their clients. Clients will benefit from a long awaited streamlining of the underwriting process by receiving better offers, and those that best reflect their actual health, while advisors will deliver the best possible products at a highly competitive cost. 

To be successful in selling life, some advisors think that being aggressive is the way to succeed. Others feel that it takes a certain charisma. It’s time to put such thoughts to rest, since neither is necessary nor appropriate.

What works best is a well-organized, logical, and professional sales approach that fits the individual advisor. But this alone doesn’t guarantee success. More than anything else it comes from avoiding five all-too-common mistakes that kill life insurance sales.

1. Failure to read clients correctly
Nothing is more detrimental to closing a life insurance sale than starting off with preconceived assumptions about what makes clients tick, their ability to make a purchase, how serious they are, or even the outcome of the meeting. 

Assumptions create “interference” that distort client “signals,” resulting in an inaccurate reading of the client, which can skew the meeting in the wrong direction. Worse yet, they immobilize the advisor’s ability to listen accurately. In effect, preconceived assumptions undermine closing the sale—right from the start.

When advisors focus their attention on listening to the client—not on “will they” or “won’t they” buy—they can uncover needs, discover motivations, recognize opportunities, and begin to see the next steps that will lead to making the sale.

2. Failure to offer solutions
Too many advisors make “the great policy” mistake. They focus on the “bells and whistles” of the policy, but never get around to connecting the dots so the clients can have a clear understanding of how owning the policy will benefit them. 

Is it any wonder that clients are often passive, show little or no interest, and never ask questions? Advisors rarely hear someone say, “Yes, that’s exactly what I want.” What they get is “We’ll think about it” or “It costs so much.” 

If the solution fails to capture the client’s imagination, there’s no sale. If it doesn’t solve a perceived problem, help make it possible for a dream to come true, or reach deep felt goals, it’s just a dull policy. The right solutions make life insurance sales.

3. Failure to learn products
Today’s life insurance products are so complex that an in-depth knowledge of even half of them is impossible. At the same time, a lack of knowledge is no excuse. Successful advisors have a thorough understanding of the products they favor, along with the details relating to possible alternatives. This includes the specifics of the contracts, relative costs, flexibility, and benefits. 

Knowledge is valuable, particularly for today’s better-informed clients. An advisor’s competence sends the message that it’s in a client’s best interest to pay attention to this advisor. In the same way, it can be helpful to mention up front the advantages and disadvantages of comparative products. 

Inadequate product knowledge can damage a salesperson’s credibility and kill sales. 

4. Failure to follow a process
In selling life insurance programs, what’s often missing is a logical process for moving the sale forward.

• The opening discussion. There should be a prepared agenda to serve as the road map for every client meeting. “Winging it” never works. Without a plan, the chances of closing the sale are nil. However, using some type of fact-finder as a guide helps avoid missing important information.

• During the presentation. Successful advisors constantly check for client buy-in. The questions clients ask, the degree they are engaged, and the comments they make are signals the degree of their involvement.

• The underwriting process. The underwriting phase can be stressful for both clients and advisors. Staying in close touch with clients helps to allay their worries and concerns by addressing them quickly.

Becoming skilled in the sales process takes practice. Lots of it. But it’s worth the effort. Role-play with a friend, family member, or a neighbor. Look for someone who seems like a good “stand in” for a prospect, or engage a coach as an alternative. Work at it so you’re comfortable with the opening discussion, the presentation itself, and responding to client concerns. 

5. Failure to ask for the sale
Even though getting to the close is a salesperson’s primary mission, many have trouble getting there. Since it’s a serious problem, here’s what’s needed to overcome it.

• Make it clear to yourself that the purpose of the meeting is to make a sale. Seems obvious, doesn’t it? But it isn’t. It takes a conscious effort for a presentation to move forward to the objective of closing the sale.

• Connecting with the client. To do this, clients must come to recognize that the salesperson brings special value that’s needed to satisfy their needs. In other words, clients must say, “This is a person who can help me, someone I need to do business with.”

• Educate. Remind yourself that the meeting isn’t yours; it belongs to the client. This is why it’s necessary to spend time laying a proper foundation by openly discussing all the important issues with clients so they can recognize that you bring them workable and beneficial solutions. 

• Desire to close the sale. Simply put, never look for reasons to delay a sale. If the client is engaged and you have addressed the important reasons for the purchase, discussed and dealt with the hidden pitfalls or hidden objections, it’s time to move forward with the sale.

Asking for the sale seems obvious, but too many advisors put it off—until another meeting or after getting further information. By that time, the client’s motivation is fading away. It’s always a good idea to remember that asking for the sale is the only way to help a client.

We’ve long been told that we should learn from our mistakes, which is certainly good advice. Unfortunately, too many salespeople just keep repeating their mistakes. Those who want to be highly successful get the message. 

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, and 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. 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 in-force policies, including rated policies and previously rated offers. 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 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 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.

Insurance companies assign a greater or lesser risk rating for a particular impairment compared to the competition, and they have proprietary risk crediting programs and table reduction programs that can come into play and benefit clients. These programs become more liberal, more highly refined and more flexible each year.

The niches life insurance companies may champion include coronary artery disease, prostate and breast cancers, multiple impairment cases, sleep apnea using CPAP, gastric bypass surgery, tobacco usage, marijuana usage, alcohol abuse history, depression and anxiety.

Cash Histories

Here are two sample cases with two quite different conclusions:

Case #1. After establishing the client’s need, the advisor pre-underwrote this jumbo case according to his usual methodology with pre-submission of the APS file, and shopping the market for the most appropriate, best-priced products. The client signed the formal application and completed the insurance exam and needed labs. The labs revealed elevated lipids and elevated liver functions that were four to eight times normal ranges. The company made an offer that was 100 percent or more above standard rates. Understandably, this came as a shock to both the broker and the client.

While important indicators for health, these blood panels can be dynamic and volatile. The client visited his physician, who re-checked and confirmed the labs. After obtaining his client’s approval, the broker shared the information with his own personal physician, who subsequently consulted with the client regarding the current lab status.

The consulting physician recognized that excessive ibuprofen use, overly vigorous exercise before the test, and poor dietary control were most likely the cause for the poor labs. The client heeded the consulting physician’s advice, and all but one lab returned to a normal range. The remaining lab had reduced from eight times normal to 1.5 times normal. The consultant also wrote a helpful letter to the company.

The result: The company approved the client at preferred non-smoker rates five weeks later for a $50 million policy with an annual premium of $560,000. This case had a positive ending as the client was led through a challenging situation.

Case #2. Fifteen years ago, a 61-year-old life insurance broker was diagnosed with hemochromatosis. Then, two years ago, he wanted to improve his term life Standard non-smoker policy rates. Medically, he required a complete blood transfusion every three years to reduce his iron levels. Fortunately, his liver functions were consistently in the normal range. By working with competitive carriers in the term life market, it came as a surprise that one carrier offered a Preferred Plus non-smoker policy for $2 million based on presenting a long history.

Recently, the same broker wanted an incremental $500,000 permanent life policy from the same carrier at the existing Preferred best rate, which turned out to be Standard non-smoker. Another company came through with a Preferred rate for the UL coverage based on an exceptional, stable, asymptomatic history with spotless labs. There were also two with Standard plus rates, while the others were Standard.

Takeaway: In spite of the opportunities for improving rate outcomes, it’s the missed ones that deserve our attention. There are times when an advisor receives a tremendous offer, one that’s much better than anyone might reasonably expect. When this occurs, it’s important to recognize that this is an unusual and, quite possibly, a unique opportunity. While the offer is on the table, it’s time for a client to take full advantage of it by maximizing the coverage. Later can be too late.

Large cases can be challenging, but if we approach them thoughtfully and thoroughly they can produce extraordinary results for clients and advisors.

The History of Impaired Risk Underwriting

Insurance carriers became interested in the impaired risk business about 30 years ago. Before that, only a few companies specialized in marketing to those with challenging medical impairments and doing the necessary underwriting.

These few companies were viewed as the last resort for impaired risk cases. Both motivated buyers and diligent life insurance agents were glad they existed. They did much to carry the torch for a new generation by creating a more open market with companies interested in providing services to clients, as well as a chance to earn profits.

Since most of the original companies were under-capitalized, they didn’t survive. However, their objectives caught the eye of larger companies with greater resources and marketplace experience.

Concurrently, advances in medical technology, communications, computerization, actuarial science and underwriting gave carriers the ability to tackle the more challenging cases. They had the in-depth knowledge and understanding of metrics related to this expanded approach of basic underwriting.

Then in the 1970s, life companies began moving away from the “captive agency” model, which gave rise to the formation of brokerage general agencies. Looking for services to attract “independent agents,” a number of these new agency entities found that impaired risk met a growing need. Because of this interest and their efforts to broaden the understanding of impaired risk underwriting, the market grew.

The Growth of Impaired Risk

As the evolution of impaired risk continued, more underwriting departments and company executives became intrigued. Thus began a tremendous surge in pricing, product development and managing marketing opportunities.

This ever-increasing market for impaired risk underwriting and products created a need for continued refinement, innovation and study. Today, increased competition and profit potential require the latest in resources from a number of disciplines.

Reinsurance. With national and international reinsurance companies thriving, life companies are able to make larger and more aggressive underwriting offers, particularly as they learn more about the nuances of impaired risk underwriting.

While many of the largest domestic life carriers develop their own underwriting manuals, they still align themselves with one or more reinsurers when underwriting risks. Critical to this success is a working relationship between reinsurance companies and primary insurers.

Advances in Medicine. Dramatic increases in life expectancy due to modern medicine is unprecedented. In addition, continuous improvement in health (and ultimately improved mortality) has not only brought premiums down but has also resulted in profits that make it possible to underwrite risks that were considered inconceivable in the past.

Not too long ago, controlled blood pressure was underwritten with a 50 percent extra mortality. Today, many of the largest companies offer a preferred best risk rate for the same scenario. New studies, additional research and medical improvements have affected how companies view many so-called “impairments.”

The Aging Population. A large and growing senior population has prompted life carriers to find ways to offer more coverage at lower costs so clients can purchase their retirement, business and estate planning services even though they are in less than preferred underwriting categories. In negotiating underwriting for seniors, companies face new concerns such as cognitive factors, appropriate testing, and decision-making on ways to view and use new medical testing.

Genetic Testing. Knowledge advances through gene testing are having a growing impact for applicants with medical issues and those who are not displaying any symptoms. This is a very complex area fraught with both moral and ethical concerns for companies and clients alike.

It’s an area that will continue to develop and become more of a factor in underwriting. Looking at gene testing objectively, there are more positive than negative aspects for consumers and life companies.

Habits That Affect Overall Health and Well-Being. These have long been an important component in the overall life insurance underwriting analysis. Now there is an enhanced methodology for discovery and analysis that aids life companies to make even more informed decisions, enabling them to offer coverage when they would have not done so previously.

Computerization, Data Analysis and Compilation. Mortality statistics from companies and research organizations, along with other techniques such as predictive analytics, are being utilized by life companies in evaluating mortality associated with a multitude of risks—this will not only continue but also become more accurate.

Actuarial and Underwriting Enhancements. The impaired risk underwriting marketplace is increasingly competitive and the playing field leveling. With greater access to comprehensive research and the tools needed for pricing, companies have figured out their own paradigm for a successful operation. Some with specialized niche underwriting make significant offers for cases that others shun. While others provide credits, table shaving or “price” for impairments in a way to garner a market and compete successfully.

Communication. Marketing and underwriting symposiums and forums for sharing ideas have gained new significance. The internet and other electronic communications have fostered an environment in which company executives and underwriters can compare the latest information, strategies and research quickly. All this translates into companies having a more clear understanding of the expectations for success when marketing new products.

Impaired Risk Underwriting Today

The marketplace continues to address the need of products for consumers with impairments, and carriers are addressing that need by making available a full range of term and permanent life policies.

Companies use a number of techniques for fully underwritten term and permanent plans, including credits, table shaving, niche underwriting, ratings and flat extra premiums. Many have loading built into their standard or preferred premiums. While these are not the lowest prices available, they are competitive and accessible for many moderately impaired clients.

Increasingly, carriers are focusing on simplified underwriting. Many have built in table reductions priced in their standard offer or a wider range of health status for acceptable clients. They are also using current technology to assist with classifying, in an effort to accept risks in a wider underwriting class, including simplified issue, direct submission, non-medical and guaranteed issue plans.

The Nature and Importance of Impaired Risk Underwriting

With impaired risk cases estimated to be 20 to 35 percent of the market, it is impossible to ignore the solutions that now exist to address virtually every part of the impaired risk underwriting market.

Due to the depth and breadth of the market, companies are becoming increasingly strategic in carving out marketing and underwriting niches that can be profitable and complement their other products and positioning.

The life insurance industry has designed impaired risk products and processes that are tuned in to economic and financial needs. For instance, high-net-worth clients need insurance companies with specially designed products that mesh with substandard pricing and support quality responses when working with even the most challenging impaired cases.

The middle and lower-end markets also have access to these carriers. Simplified issue plans allow for various impairments to exist in a manageable range, streamlining the negotiation and medical evaluation process. Some of the largest companies are even finding ways to cater to the middle market without involving field agents with simplified processes and underwriting by using technological advancements and data analysis.

The Road Ahead for Impaired Risk Underwriting

Although impaired risk underwriting has come a long way in a short time, there is still much to be accomplished in an expanding life insurance marketplace that has a need for specialized underwriting. Everyone involved has a role to play:

 • Carriers and underwriters must be committed to keeping up with technological changes in a timely way. To fall behind is to fail.

 • Agents and brokers can benefit from more and improved training to better understand impairments. Their confidence, interest and ability to serve this market require significant skill and knowledge.

 • Consumers are an integral part of the impaired risk equation. For maximum benefits, they need education and quality solutions for their medical issues that informed agents and brokers can deliver in assisting them to meet their financial responsibilities with appropriately priced life insurance policies.

 • Specialists can play a key role, too. With the growth and sophistication of brokerage general agencies, knowledge of impairments, how to underwrite them and where to go for coverage has broadened over the past few decades. These agencies are often staffed with former home office underwriters who possess enormous knowledge and experience that is further enhanced by a field underwriting perspective.

Clearly, impaired risk underwriting has progressed from an often marginalized, last resort function to a critical, mainstream role in helping to provide enormous value to those in need of life insurance protection and coverage.

In the years ahead, it’s only reasonable to suggest that impaired risk underwriting will become increasingly important for carriers, agents and—most of all—­consumers.

What Selling Life Insurance Is All About

In the spirit of full disclosure, this is an article about how to really market life insurance. If you’re looking for sales tips for making quick hits, this is not for you. However, if you’re committed to the value of life insurance and want to achieve superior results for your clients and yourself, you’ll find what you’re looking for here.

Selling life insurance never starts with a policy—it starts with finding the right solution for your client—a task many agents find overly demanding and unnecessarily time-consuming.

Scoping out a client’s needs requires asking the right questions, listening carefully to those answers, developing one or more possible solutions, and arriving at an agreement that best addresses the problem at hand. When this is accomplished, a client must agree that you will construct and price the insurance solution selected.

Thorough Knowledge of a Case

That’s what selling life insurance is all about, but what takes effort is the process for arriving at the most beneficial solution.

The first step is to know the case in its entirety. An agent’s role is to gather the necessary information, while the role of a general agent (GA) or brokerage general agent (BGA) is to analyze data so that it becomes a basis for gaining approval of the most appropriate solution. All of this depends on the interaction between all the parties involved throughout the process.

Advisor and Client Objectives

As a component of this process, both an advisor and a client have their own objectives.

The advisor’s objective. Advisors want to place cases to satisfy their clients’ needs and they want to be paid for their creativity, knowledge and effort—it’s here that the process can become somewhat dicey. An advisor should make it clear that his client’s need is foremost and his need takes second place.

Success and efficiency in achieving the desired result are critical. Equally important, advisors must feel they are doing the most complete job possible, which astute clients recognize intuitively. All of which makes it necessary for an advisor to have a solid grasp of all products, carriers and underwriting solutions.

The client’s objective. Obviously, clients want the best coverage for the best price. In order to achieve this, a client must both fully understand and embrace an insurance solution in order to make the necessary commitment. A skilled agent must be able to answer all client questions as early—and quickly—as possible. Difficulties can and do arise (price, changes to the initial price projections, or medical and financial underwriting delays) and can cause the process to linger. Thus, reminding your client of the conversations that led up to the discussion is helpful.

Financial and Medical Underwriting

The foundation that undergirds meeting both the client’s and advisor’s objectives combines both financial and medical underwriting.

Financial Underwriting. The case size dictates the nature and extent of financial underwriting needed to evaluate and approve a case. Companies have differing requirements, ranging from a notation of personal income and net worth on an application, to third-party documents verifying and detailing various assets and considerations involved in the request for insurance.

Medical Underwriting. It’s here that an advisor plays a key role in obtaining front-end knowledge of a client’s personal and family medical history. The more specific information that is obtained and made available to a GA/BGA, the greater the chances for a more efficient, successful process. This responsibility must be taken seriously, because the fate of a case often depends on it.

Life Insurance Company Underwriting

Any one of dozens of carriers can handle basic risks. However, only a few carriers may be appropriate for a more challenging or sophisticated case with medical issues, financial underwriting concerns and/or pricing questions. It’s with these situations that the knowledge of what can work and what is available to solve the problem at hand is critical.

Individual companies have their own unique approaches to problem resolution and underwriting. It’s important to know this or at least to have a sense of what may be needed for approvals. While this information is readily available, questions still need to be asked.

Companies can retain only a maximum amount of coverage for each risk, based on their financial strength. In some cases, they will reinsure portions of a risk, which makes them responsible to the reinsurer. Retention can range from zero to $40 million for a company. At times, a reinsurance relationship causes a company to be more conservative.

Each insurance company has its own underwriting niches, special capabilities and perspectives. It is possible to receive preferential and more competitive treatment if a company wants to be more aggressive or win a case with underwriting that offers credits for various lifestyle factors. Other companies may have special knowledge and experience in handling various types of risks, i.e., heart or coronary artery disease, certain cancers, diabetes, sleep apnea, particular types of tobacco use, alcohol abuse history or mentions, and moral history, among others. Table shaving and upgrade programs can apply to specific products.

The point is that underwriting criteria and requirements should form the basic components in making carrier selection.

Managing Three Critical Relationships

Perhaps the most significant task in selling life insurance is managing the following three relationships in such a way that the process moves forward to a successful conclusion.

 1. GA/BGA with Advisor. The core of this relationship is open and frank discussions about expectations and review of all appropriate alternatives in order to select the best plan that fits the client’s needs.

 2. Advisor with Client. Clients must cooperate with their advisor from the start and feel confident that they will receive support in making appropriate decisions and assistance in expediting the case.

 3. GA/BGA with Company Underwriter. Mutual respect and a genuine appreciation for the role each performs are necessary ingredients in maintaining a win-win relationship.

Presenting a Case to Underwriting

The methodology for presenting a case to an underwriter is an important step in the sales process. Once the relationships are aligned and the available information collected and analyzed, it’s time to compare company feedback on the case.

At this point, an advisor will have an estimate of what is possible and determine whether it’s likely to meet the desired objective or if it will be necessary to make a mid-course correction in setting pricing expectations.

There are several initial ways to engage a company. Generally, a confidential quote (one that protects the client’s anonymity) is obtained by sending selected companies a carefully crafted summary of the client’s medical picture.

Responses from the summary usually—but not always—give a GA/BGA direction on which one or two companies would be the best choice to pursue further for an offer. If there seems to be a clear indication of a carrier offer, a trial application or informal application is submitted with the entire file.

There are times when a GA/BGA discusses the chances and handling of a case with insurance company officials. It can be useful to let the company know the importance of the case.

Overall, the best strategy is having a plan that is flexible and fully communicated to all parties involved and, at the same time, have back-up plans ready, should they be necessary.

Winning the Case

Winning a life case—making the sale—depends on everyone involved maintaining an open mind and a vision that encompasses one or more courses of action for its resolution. In the final analysis, we all want to deal with those who act with integrity and have a reputation for knowing what they are doing.

There are many ebbs and flows that occur during the course of a case. If they are seen in the best light and dealt with properly, they create a winning result for a very satisfied client who offers many years of repeat business and referrals.