Underwriting younger ages can be one of the most difficult tasks of an underwriter. Besides the obvious task of determining insurable interest on individuals with no employment, no immediate financial need, little track record on health and few clues on the medical end, most underwriters have the least experience working on this age group. It is also the lowest risk reward for a company—smallest premium relative to policy face amount—so it raises caution flags at each step in the process.
The aforementioned insurable interest is of key concern. The policyholder must have a reliable financial interest in the child being insured. What might have once been insurance for medical expenses and burial insurance has progressed quite far into financial plans of insurance and savings. The death of a child generally produces little if any current financial loss to the beneficiary, so future needs of what are becoming higher and higher face amount policies are really guesstimates on the family’s socioeconomic status. Without carrying the financial element of this further, simply put the application has to make sense to the underwriter for it to proceed to the next level.
The younger the child, the more difficult the underwriting task from a medical aspect. There are generally few medical records, and any conditions that will compromise a child’s eventual life expectancy may not yet have made themselves known. Generally, insurance will not be sought until after most causes of immediate or neonatality have come to pass. Country specific mortality also varies—in the United States, postnatal care is usually quite good, and global causes of mortality are either bypassed or effectively managed.
One constant state an underwriter looks at is prematurity. Despite the high and advanced technical support in supporting children who are born before 37 weeks of gestation, there are still longer term consequences that include lung maturity, impaired development and growth, and mental and physical developmental delays that may have an underwriter postpone a case until these occurrences would become manifest.
Heart malformations and chromosomal abnormalities are also leading causes of mortality and morbidity in the earliest years of life. Heart defects such as a persisting hole in the heart (patent ductus arteriosis) or defects in the heart chambers (atrial and ventricular septal defects) may have to wait to be surgically corrected, and these lives are not immediately insurable. Chromosomal abnormalities such as Down’s syndrome, Marfan’s syndrome, hemophilia and thalassemia, or sickle cell disease may not be insurable at this time. Developmental delays may be forerunners of severe autism or mental deficiencies in which a child may be incapable of self care or independent living in later years. Conditions like this have to play themselves out over time and may be postponed until a definitive diagnosis is made or a child’s progress in school is assessed.
Evidence of well baby checkups and good medical care is always considered. A child who is well cared for, does not show signs of increased accidents or neglect/abuse, gets normal vaccinations and has a normal course in school is the most reassuring prospect. A lack of regular care leaves the underwriter guessing and may require further medical evaluations that delay the issuance of the policy. Normal physical growth and development of appropriate motor and psychological milestones are also important to demonstrate, particularly in applications for preschool children.
What used to be a more unusual occurrence of insurance on juvenile lives has now become an important part of many estate plans and trusts, as well as an anticipation of future insurance needs. Education, savings and the establishment of future insurability are now recognized by both parents and grandparents. As our bank of knowledge is much less and our health experience limited in younger individuals, anything that can be provided to the underwriter to show a justified need or reason for insurance in a normally developing child (both physically and developmentally) speeds the process and allows for a successful placement.
