When dealing with impaired risk cases, life insurance agents have a responsibility to search the market for the best possible offer for the client.
You don’t have time to do all the legwork yourself, and can’t be expected to be up on what carriers are the most competitive in different markets and niches. That’s why producers rely on the knowledge and expertise of their BGA or IMO/FMO partners, who tend to have a strong understanding of each insurance company’s appetites for certain types of risks.
A good BGA or marketing organization will help an agent recognize, understand and solve potential problems with impaired risk cases and can guide the agent to the desired destination: placement of a policy.
While it’s reassuring to know that specialized assistance is available to help you secure the best possible offer for your client, there are a number of ways the producer can improve the chances of strong offers by providing exactly the kind of information underwriters need to make informed decisions.
The most important part of the process, according to Cayse Mersch, senior life marketer at Fountain Hills, Ariz.-based Brokers Alliance Inc., is asking the right questions up front to obtain critical, detailed information right at the beginning of the process. Mersch ought to know, as he is an experienced veteran in helping agents place impaired risk cases.
“If I can summarize a case accurately when I present the case to an underwriter in the early stages, before an application even goes in or before [attending physician statements] are ordered, they will do everything they can to issue at the rate class that they quoted up front – assuming, of course, there are no surprises, but that gets back to the importance of gathering good intel up front,” says Mersch.
So let’s get specific. The client has some health issues. What does the producer need to provide to help advance the underwriting process?
“The most important info that an agent can provide to me for a case that is impaired due to health history would be the name of the diagnosed condition, the testing that has been done on the client, and, probably the most important info that I look for is the medication that the client is or has taken since the diagnosis,” says Mersch.
Also important is the follow-up that the client is required to do by his or her doctor. “The follow-up is very important as that is crucial for future wellness. Obviously this preliminary info has to come from the client. This seems simple enough, but a lot of times the agent either feels uncomfortable asking the client for this info or plain just does not want to be bothered. This I find to be the biggest obstacle in the early stages of an impaired case,” Mersch says.
Suspicion in the mind of an underwriter is the greatest roadblock to a quick approval, so an agent doing everything possible to remove suspicion by providing complete information will greatly improve chances of timely placement.
Another critical part of the process might seem obvious, but Mersch says gets overlooked all to often by the agent. That is to ascertain what kind of premium range the client can comfortably handle.
“A lot of times an agent will come to me with an impaired case and I will ask, ‘What is this guy’s premium tolerance?’ More times than not the agent will have no idea,” Mersch says. “Before reaching out to anybody, most of the time we have an idea if a case will be heavily rated or if maybe there is a shot at standard. If we know the premium tolerance, we can avoid wasting a lot of time on a case that we know will be table rated on a client who is not willing to pay any more than a preferred premium. Seems like a simple thing, but rarely do agents ask, ‘what are you willing to spend on this if we can get it done?’”
While it is common for impaired risk cases to be shopped among several prospective carriers in search of the best offer, Mersch says he doesn’t see much value in using that as a bargaining chip.
“I will reach out individually to several carriers, recap the cases based on all the info that I have received from the agent and ask them, ‘based on what I have just told you, how do you think you guys would look at this case?’ They know we shop the cases but I think it is shows more respect to address them individually and give the appearance that we want to do the case with them if at all possible,” Mersch says. “They all want to do the business if they can, so showing that I am shot-gunning the case to everyone under the sun seems counter-productive.”
When a producer, a BGA or marketing organization specialist and an underwriter work efficiently together to issue an impaired risk prospect, everybody wins. But if the agent does a half-hearted job at collecting and providing information for the underwriter, everybody loses.
- Do you have some tips of your own for how agents can help advance the impaired risk underwriting process? Please share them on this new thread.
Brian Anderson is the Executive Editor of Insurance Forums.