Do GA/MGA/IMO/FMO draft cover letters

[MoneyNirvana]

Do you base your selection of a GA/MGA/.IMO on their ability to get your case approved with underwriting for life insurance cases. In lieu of it, do they help with drafting of cover letters if you provide highlights or discuss it with your GA as his agent on the phone Or do you talk directly to underwriters at the insurance company.

Your GA's Underwriting and product knowledge with numerous carriers will be essential in selecting appropriate carriers for each case.

CASE IN POINT:
Parent's three children are in School with parents providing for their children's tution on all three. every child will be graduating in next year over a period of three years. (2019,2020,2021).
Parents have $1m ea in-force term policies issued some six years ago. Based on that, a request for $500k for each child was presumed to be normal even when the children are barely at $6k/yr in their own incomes right now.
I almost assumed that no explanation will be required if parents are supporting their kids education via tution/living and that having $1m each almost allows kids to get started on a $500k policy face amount.(Half of their face amount). Parents will be payor & owner of their policies but not the beneficiaries. (most likely brothers/sisters will be beneficiary).

How do you justify or provide explanation for such in your cover letter. Do GA/MGA/IMO talk to their insurance company underwriters via a cover letter with talking points discussed between GA/Agent or IMO/Agent.

Do GA./mga/IMO ever get deeply involved in drafting cover letters for the agent?

 

[pfg1]

I don't really go through imo/fmo channels often to submit or handle my business so I can't give you alot there. I write my own letters if needed and deal directly with the companies. Doing policies for children is fairly common, most companies have no issues as long as parents are adequately insured and you can justify why.

 

[MoneyNirvana]

I don't really go through imo/fmo channels often to submit or handle my business so I can't give you alot there. I write my own letters if needed and deal directly with the companies. Doing policies for children is fairly common, most companies have no issues as long as parents are adequately insured and you can justify why.

Well, Children's Income became an issue with an Insurance company unwilling to provide 50% of parent's death benefit face amount? Just based on $6k per year in income.
Parent's are adequately insured for $1mm each, yet i suppose becoz its 40 year term policy and not permanent is where this is beginning to be an issue for the underwriter at the insurance company.

 

[pfg1]

Well, Children's Income became an issue with an Insurance company unwilling to provide 50% of parent's death benefit face amount? Just based on $6k per year in income.
Parent's are adequately insured for $1mm each, yet i suppose becoz its 40 year term policy and not permanent is where this is beginning to be an issue for the underwriter at the insurance company.

Why are you writing these policies, specifically?

Have you already submitted and it is not being approved? Or trying to get your ducks in a row to do so? Trying to understand where you are coming from.

Typically income shouldn't be an issue. Parent owns the policy, parent should be beneficiary. Don;t get caught in goodman triangle. 1/2 of what parent has in force is typically the max they would go, unless there is a valid reason for more.

There is always a reason the policy is being applied for, and sometimes approval is not income related at all (insureds). Most parents that have college debt on their plate SHOULD have policies on their kids. I've done lots on children with zero income. Just explain to them why you are writing the policy.

 

[MoneyNirvana]

Why are you writing these policies, specifically?
A: agent is recommending a 40 yr term policy specifically for children whose parents are rich & are ready willing & able to provide three kids financing in full their education at a good university. Knowing this, I recommended the longest term in support of getting pref plus policies for the kids so parents will pay for 10 years or so & then kids will take over the payment.
I m asking for $500k death benefit 40yr level term for 3 kids with an average premium between 450 to 750 per year. Right now the third kid is under 19 & this company will not provide a 40 yr term until she is 20 (which she turns on March 28, 2019).

Q: just explain to them why you are writing policy on kids?
A: This insurance company has made income an issue for issuing the policy so far. They have completed their blood/urine/paramed & looks approval as applied for (Pref. plus) however, because of income the face amount proposed by insurance company underwriter is showing less than $500k. Take it or leave it says underwriter.

Q: There is always a reason the policy is being applied for?
A: Dang Right!!!. but, why does insurance underwriter want to drag this matter from whats so obvious ? Why do i need explaining via cover letter.
I did not write a cover letter at time of application & these children's app started out as " TeleApp".

So in general, parents are owners & payor of this policy, the desired face amount is $500k, & underwriter is asking why do they need $500k death benefit.

Hopefully i have answered your questions here?

Also remember, parents did apply along with the kids for little less than $1mm of death benefit coverage & insurance company issued a pref plus to wife for $995,000 (As applied for Pref Plus) based on a 90k household income yet becoz of parents existing $1mm policy each the underwriter is questioning why does he need another $995k . Based on $90k income, they are offering only $505k to Husband but wife can have $995k.

There must have been something wrong while answering the TELEAPP? i learnt my lesson here that you never let the insureds do a teleapp if they arent sure.

 

[WinoBlues]

Well, Children's Income became an issue with an Insurance company unwilling to provide 50% of parent's death benefit face amount? Just based on $6k per year in income.
Parent's are adequately insured for $1mm each, yet i suppose becoz its 40 year term policy and not permanent is where this is beginning to be an issue for the underwriter at the insurance company.

PreQual the companies. That is why we have multiple companies.

I just submitted a policy on the third child of a client couple. The parents and the other two children all have the same face amount. The parents are UoO GUL and the kids Assurity Par Whole Life. The children are very young. 0 income.

 

[MoneyNirvana]

i have two more families that are in the same situation and i m very interested in learning whats the best way to really get a 40 yr term on two boys & 35 yr Term on parents who already have $1mm in existing policies.
If i fail with this insurance underwriter the next one is just more complex/complicated.
I dont think there is a 40 yr term policy available just yet beyond this insurance company.

Dang it.. what to do ? what to do?????

PreQual the companies. That is why we have multiple companies.

I just submitted a policy on the third child of a client couple. The parents and the other two children all have the same face amount. The parents are UoO GUL and the kids Assurity Par Whole Life. The children are very young. 0 income.

Lucky U? you got permanent policies on kids? i m doing TERM so its not fruitful or underwriter going gagaaa over a term policy. its what i think it is!!!!!!

 

[WinoBlues]

i have two more families that are in the same situation and i m very interested in learning whats the best way to really get a 40 yr term on two boys & 35 yr Term on parents who already have $1mm in existing policies.
If i fail with this insurance underwriter the next one is just more complex/complicated.
I dont think there is a 40 yr term policy available just yet beyond this insurance company.

Dang it.. what to do ? what to do?????



Lucky U? you got permanent policies on kids? i m doing TERM so its not fruitful or underwriter going gagaaa over a term policy. its what i think it is!!!!!!

Really not that complicated. Or that much comp. Are you captive to the one company?

As to types of policies, there is also GUL.

 

[WinoBlues]

Sell 30 year term or explain the situation to the parents of these 35 year old 'children' they need to increase their premium.

 

[MoneyNirvana]

got it. 40 yr term on children & 35 yr on wife & 30 yr on husband (only 505k db).