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The Value of a Good DI Field Underwriter

You have helped your client to understand that their ability to earn an income is their most valuable asset. With your help, the client has determined that, if a disability occurred, they do not have sufficient invested assets to provide a steady stream of replacement income. The client has L.O.V.E. (Love or Obligation, and Verifiable Earnings). The client agrees that income insurance is the best option for their financial situation.

You are enthusiastic. You call your MGA to request a quote. You set the appointment. You present the quote; determine an acceptable benefit structure and comfortable premium. You've planned ahead; have the app in hand. You get to the health questions. Suddenly your momentum comes to a screeching halt.

Your client, who wants to buy the $14,000/mo benefit, has just had back surgery and is still receiving therapy.  Your prospect asks, "Does this have any impact on my application?” That let-down feeling kicks in. You tell your client you need to regroup with your DI specialist and will reschedule another appointment once you explore the right market place. That's when you learn to appreciate the value of a good field underwriter. 

The field underwriter is the  person at your MGA's office who knows how the carrier underwriters will react to a risk, who will consider submission of an app, and who will assure you that you haven't wasted your time on what you now believe to be an uninsurable risk.  In many instances that field underwriter will find the right market place for your risk, even if you think it is impossible. Why? Simple. It's every underwriter's dream to hear the magical words, "approved as applied for".

So what do you do to properly prepare for the presentation? Secure some simple information. Information gathering is vital to the success of a case. 

Let's define success. Success doesn't come from just securing a policy for your client, but the placement of that policy. One for which your client is grateful; knowing he is properly protected.

But wait! The policy was issued, albeit with a diminished monthly benefit, with exclusions, or maybe with a rating. How are you ever going to convince your client to accept the policy? Would you even accept the policy? A seasoned field underwriter will know how to accomplish that for you and your clients. A good field underwriter is usually affiliated with an organization that carries a full portfolio of DI products to cover any cash flow disruption due to disability. 

None of us like surprises. Neither do your clients. Let's turn a surprised customer into a satisfied customer.

So what info should you gather? Let's look at a few scenarios and their outcomes:

High Net Worth

You find out that your client has a net worth of $15 million.  Your first thought may be, "Why did he even call me? He doesn't have an insurable need."

On the contrary, he has been so devoted to developing that nest egg, he can't see touching it in the event of a disability. Besides, he understands the value of a buck. Why not pay pennies on the dollar and let an insurance carrier assume the majority of the risk?  Wow! He gets it! But how are going to convince an underwriter to take on the risk? You won't have to. Just speak with your MGA field underwriter. The key question that will be posed to you is, how liquid is the prospect's net worth, aside from his personal residence and worth of his business.

Often, the prospect includes the business, which can be excluded, as well as the personal residence.  If it turns out the risk is abundantly liquid, there's still a market for this type case. These folks want to work. They strive for success, and cannot see themselves "not working" save for a disabling event. They want their ability to earn protected, and they do not want to self insure.

Ongoing Health Issue(s)

You know this one wasn't going to be easy from the onset.  Your client has just informed you she's been to various doctors over the past several months. She has not felt well.  No wonder this sale was so easy.  You didn't even need to broach the topic of income protection. Now you are asking yourself if you should even submit the application. You wonder when your MGA field underwriter is going to call to suggest withdrawal of the app.

Not so fast. If there's been a definitive diagnosis of a pre-existing condition, then a policy may be offered with exclusions. You will likely be alerted to this possibility on the first communication from your MGA.  It is at this time, early in underwriting of your client's application, that you'll want to inform your client of the possible exclusions. The reason for this is twofold:

1) While we all know we have our faults, we certainly don't like it when someone brings them to our attention. Applicants do not like to be told they are not perfect, even if they know it.

2) Clients may prefer not to discuss their health conditions with you, especially someone with whom they are just establishing a relationship.  

Hazardous Activities  

You submit the app. You also knew that a hazardous sports questionnaire would be needed as your client plans to see if he can quit his day job and instead race for prize money on the weekends. Alarm bells go off. You know the outcome can't be good, especially since it was the client’s wife who called to seek out disability insurance specifically because he races. They just had a baby. She's a stay-at-home mom. Is there a policy that will protect the client’s income and provide coverage while racing? Yes, but a better idea might be to purchase two policies. You can get a Non Cancelable and/or Guaranteed Renewable policy with an exclusion for racing, and suggest the idea of securing a policy to insure against disability solely while racing. This racing only policy has the added benefit of revealing the other cost of this hobby.  

When you, the writing agent, are informed of possible ratings or exclusions, or a benefit restriction, do yourself a favor and inform your applicant right away. Why? So the client "gets over it". They need time to accept that they are not a perfect specimen. This takes about the same amount of time as the underwriting process. 

By the time the policy arrives, he will be more willing to accept the offer made by the carrier. There are times when a restriction may be reconsidered. This is helpful, but you cannot always count on it. Some examples of when a modification can be reconsidered include elevated blood pressure outside of normal range, height disproportionate to weight, or a recent injury to a leg, arm, or back. Some exclusions may not be reconsidered, but may become an eligible claim if a future disability is due to trauma as a result of fracture, burn, or laceration. So, don't forget to share bad news of restricted coverage just as soon as you hear from your field underwriter.

Of course, all this can be avoided with Guaranteed Issue Individual DI, which is available to some groups with as few as five lives. But that's another story. 

Diana K. Schmitz, LTCP