Succeeding With Me In The Application & Underwriting Process For Life Insurance

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Life insurance underwriting is a constantly changing world of medical science, evolving data, and analytical techniques.  Companies due to the competitive nature of the life insurance business have their actuaries crunch mortality statistics and claim experience to review them annually with their re-insurers.  This results in more favorable underwriting offers and lowers premiums throughout the life insurance industry.           

You should know one company’s favorable offer can be another company’s rated or declined application.  The challenge for me is always finding and aligning your risk factors with the right company, right underwriting program, right product at the best premium while managing your expectations throughout the entire process.  Reviewing medical records in advance of submitting an application can be very beneficial at times, and occasionally it’s necessary to have your medical records reviewed by different underwriters to achieve a favorable premium offer for your life insurance.  Sometimes underwriting is very easy and other times it can be difficult.

More insights in “We’re In This Together” and “Understanding Underwriting”.

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We have discussed your personal situation in detail and we’re ready to submit your application for life insurance.

The life insurance application is designed to collect lots of information to determine risk factors and your eligibility.  My goal is to help you understand the following details of completing a life insurance application and doing it right.  Details matter and this is where experience counts.

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AGE & GENDER: Your life insurance premium is based on your age and gender.  The younger you are the less your premium.  Females pay less than males based on the actuarial fact they tend to live longer.

OCCUPATION / DUTIES: There is certainly a greater mortality risk if you fish the Bering Sea for crab rather than an occupation with a much lower mortality risk attached to it.  Statistically, certain occupations simply pose a greater actuarial risk to the insurance company and therefore you’ll pay higher premiums.

MEDICAL, PERSONAL HABITS & LIFESTYLE:  These basic questions help evaluate mortality risk to the insurance company.

Have you seen a doctor or doctors in the last five years and for what reasons?

Any pending medical visits or surgeries planned?

What prescription medications are you taking?

Family medical history (parents and, or siblings) e.g., cancer, diabetes or cardiovascular disease, etc.?  Are they still living, if deceased, at what age and what was the cause of death?

Do you use tobacco?

Do you use marijuana for recreational use or for medical reasons?  Any other drug history or rehabilitation?

Have you ever been declined for any type of disability, life or long-term care insurance, etc.?

Any bankruptcies that haven’t been discharged?

Have you ever been arrested and for what reason?

Driving History – DMV records are checked.  Any DUI’s, reckless driving, or moving violations in the last 5 years?

Avocations — Aviation, Scuba Diving, Sky Diving, Auto Racing, etc., in the last 3 years or planned for the future?

Foreign travel out of the country, where, why and how often?

WHAT IS FINANCIAL UNDERWRITING?  

Whether you’re seeking a $100,000 or a $50 million dollar life insurance policy, FINANCIAL UNDERWRITING must be explained and justified to the insurance company.

It’s the evaluation of a proposed insured’s personal or business financial background, their current economic situation, and the amount of life insurance applied for with the company.  Remember the primary purpose of all life insurance is to protect against financial loss (i.e., loss of income,  debt repayment – mortgage or college loans, last expenses, insurance to address business needs, or estate settlement costs, etc.).

The purpose of financial underwriting is to determine the proposed insured’s motivation and make sure that the amount of insurance applied for is reasonable, affordable, and in line with their needs.  Simply stated does the purpose make sense and can it be financially justified?  Generally, the larger the life insurance face amount, the more supporting financial documentation will be required such as tax returns, brokerage or financial statements.

Why is Financial Underwriting so important and necessary to the insurance company?

It’s essential to prevent against over-insurance or anti-selection.  The underwriter will question amounts far in excess of any need that can’t be established.  Anti-selection may happen when an applicant withholds or misstates information pertinent to the application or need.

INSURABLE INTEREST:  For a life insurance purchase to be valid, the owner and beneficiary must have an insurable interest in the proposed insured.  The concept of insurable interest lies at the heart of financial underwriting.  Simply put, a person has an insurable interest in someone when the financial need would cause that person to suffer a financial loss.  For purposes of life insurance, everyone is considered to have an insurable interest in their own lives as well as the lives of their spouses, dependents or even in business planning situations.       

AFFORDABILITY:  The underwriter will seek an understanding of the source of premium funding.  Where is the premium coming from and will the client be able to pay for the policy on an ongoing basis?  

NOTE: The company always reserves the right to ask for more financial information and verification should it be requested by the underwriter.

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MEDICAL HISTORY:  Health is everything in underwriting life insurance and used to determine your eligibility and likely premium rate to be offered to you.  The medical portion of the application is designed to ask detailed questions regarding current and past health conditions, which need to be fully disclosed on the application.  Questions about your family’s medical history to determine whether you’re at a higher risk for developing certain medical conditions, such as diabetes, heart disease, cancer, etc., will also be asked of you.

MEDICAL TESTS:  A medical examination will include blood, urine, height, weight, blood pressure and pulse readings.  Depending on age and the amount of life insurance applied for with the company.  An EKG may also be required.  All medical requirements are paid for by the insurance company with no cost to you.  They are scheduled by a third party vendor who will call you to schedule a convenient time to provide these medical tests at either your home or office.  

I recommend an early morning examination when you’re relaxed.  The most accurate results are when the applicant has fasted the night before and not exercised prior.  Exercise and foods can elevate certain test numbers and alter your results.  You have the right to request your test results once the underwriting of your application has been completed.

TELEPHONE INTERVIEW:  A telephone interview, and, or medical tests may be required depending on your age and the amount of life insurance you are considering with the company. 

Once your application has been submitted and received you may be called for a telephone interview to confirm all of the answers on your application as well as detailed medical questions.  IMPORTANT!  The answers you provide should not be any different than the information we discussed in advance or disclosed on your application.  It should be consistent with no discrepancies or contradict what the underwriter is reviewing on your application or from the transcribed telephone interview.

NOTE: The company always reserves the right to ask for more detailed medical testing should it be requested by the underwriter.

MY COVER LETTER:  IT’S ALL ABOUT THE DETAILS!  It helps the underwriter answer questions and read between the lines on your application.  More importantly, it clarifies issues and solves questions that the underwriter may have regarding the applicant.  I may at times even ask for special considerations I feel are appropriate for your personal situation.

Obtaining Information From Your Application:  The insurance company has access to lots of information based on the appropriate and required signed authorizations.  They can view the MIB, medical records, national prescription drug databases, or credit reporting agencies.  It can even conduct interviews with business associates or professional advisors if needed.

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THE UNDERWRITING PROCESS

I will advise you once your application is submitted it normally takes 4 to 8 weeks to receive an offer from the insurance company regarding your application for life insurance.  

I will ask you to review the application carefully and make sure all answers are correct and complete.  If not, notify me immediately so I can communicate any changes to the insurance company.

I normally submit an application for consideration only.  You are not obligated and neither is the insurance company during the processing of your application.  Once your application has been formally approved and you have accepted their offer for coverage.  The policy is in-force once the company has received your initial premium and appropriate policy delivery requirements have been signed by the insured / owner.

A conditional receipt is issued to the insured / owner when a premium is paid at the time of application, which provides you with temporary life insurance coverage during the processing of your application.  A conditional receipt will be determined on a case by case basis.

I recommend premiums are paid via monthly bank withdrawal.  I suggest automatic payments so no need to worry about a premium notice being lost in the mail, and it’s easier to budget and pay premiums on a monthly basis.  Premium modes of quarterly, semiannual or annual are also available.  I can discuss with you the premium mode that best meets your personal situation at the time of application or policy delivery.

I will follow your application closely and contact you once we receive word regarding your status.  The insurance company must be notified if you have any change in health or visit a doctor during the underwriting of your application or subsequent to the delivery of a policy. Try to hold off on going to the doctor for any other reason if you can.  A life-threatening emergency is obviously an exception.

You will never hear me tell you life insurance underwriting is simple or easy.  However, I will always tell you that it is worth your time and effort to follow me and let me take you through the entire process, and after all the steps have been completed.  You will have acquired a valuable life insurance policy. 

AFTER THE LIFE INSURANCE POLICY IS ISSUED

We want to review the policy carefully and make sure you understand the benefits, provisions, and limitations as well as make sure it was properly issued with all of the benefits applied and approved for with the insurance company.  Your policy will be tracked for an annual review.  I will always assist you with the appropriate forms should a claim arise.

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Let me help you put the pieces of your underwriting puzzle together.

My ultimate goal together with you is matching an anticipated offer with the final underwriting offer.  This adds up to an underwriting success when an offer is accepted by you and a policy is put in force.  It is about you winning and me helping you to win!

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Marc Maretsky Personal Insurance Services based in Beverly Hills, serves all of California and the United States.  I help my clients acquire life, disability, long-term care, and critical illness insured solutions, as well as enroll them into Medicare when eligible.

“No matter how fast technology changes our world and everything around us.  I believe the personal touch and a human voice are more important than ever.”

The purpose of MY WEBSITE is to provide insurance concepts and ideas of interest to my clients, favorable introductions, other professionals or anyone else who may be viewing this information.  The content is general in nature and subject to change.  It should not be considered complete advice on any company, product or ideas described.  Your appropriate attorney, CPA or tax advisor should be consulted for legal or tax reasons regarding your personal situation.

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