There’s Life After A Decline

    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.

    Allan D. Gersten, CLU, ChFC, CFP®, is chairman of First American Insurance Underwriters, Inc., an insurance brokerage that specializes in supporting agents with life insurance, long term care and annuity products.

    Gersten can be contacted via telephone at 781-449-6800. Email: