Avoiding underwriting issues that derail a case
4. A client may be in denial.It’s natural that human beings avoid viewing a medical impairment as contributing to their ultimate demise. This is why it’s not uncommon for clients to assume that a particular medical condition shouldn’t have a possible impact on their life expectancy and mortality.
5. A doctor didn’t fully communicate or even mention an issue or health diagnosis. Many times, a patient’s diagnosis is tracked without treatment, as the patient doesn’t have any symptoms, which may not show for decades, or ever for that matter. For various reasons, the doctor may not see the need to discuss or alarm a patient with a diagnosis in the absence of symptoms or complaints.
6. Administrative snags. Processing delays can be created by some medical offices, problems with locating a retired physician, or the difficulty in tracing down legacy medical files, all of which contribute to potential obstacles to timely approvals.
7. Insurance companies view family histories differently.Family history is one of a few basic criteria used to determine whether an offer is preferred or standard. Individual life companies have their own niches for early family cancer, cardiovascular or cerebrovascular deaths of family members. Usually, however, insurers don’t take into account the circumstances of a death of a parent due to cardiovascular or cancer when doing a review.
Recognize the role of a client’s lifestyle. Such things as personal habits, moral behavior, and poor familial status all have statistical and historical information to indicate the additional mortality involved when one or more of these factors exists. The degree and specifics are closely evaluated for each one to determine the additional risk involved.
Alcohol abuse is an example. Information sources that can impact alcohol abuse risks include motor vehicle reports, a liver enzyme test, lipids testing, carrier reflex Carbohydrate-deficient transferrin testing, attending physician statements noting abuse and, a client's inspection report. When a client doesn’t want to discuss these areas, it complicates the advisor’s ability to reach a satisfactory life insurance solution.
Then, there’s following up on missing or inaccurate information on felonies, avocations, and bankruptcies, which can further complicate, delay and even derail a case. It’s also worth pointing out that many applicants "shoot themselves in the foot" by admitting to risky behaviors on Facebook. There’s no place to hide since insurance companies have access to data sources that can compromise any hope of living a private life.
All this adds up to recognizing that applying for life insurance is a serious, and oftentimes, a complicated matter. Those advisors who understand the underwriting pitfalls are best positioned for offering their clients the coverage they need at a reasonable cost.
Allan D. Gersten, CLU, CFP, ChFC, is Chairman of First American Insurance Underwriters, Inc., a Needham, Mass.-based national life brokerage firm specializing in coaching growth-oriented producers and providing them solutions to their complex cases. Contact him at [email protected].
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