Q: “What do you mean get paid for all our work as life insurance advisors? Aren’t we getting paid now?”
A: Sure. You get a commission for policies you place, but that’s not all the work you do. Your work starts with the first meeting with a prospect — and includes everything after — making telephone calls, answering underwriting questions, going back to the prospect for additional information, reviewing applications, making sure all the paper gets in and to the right person, and a dozen other things.
If you were to keep a time sheet on every case, my guess is that you would be surprised how much work you do. And if something goes wrong and the case doesn’t close, you could double these efforts and still not get a case paid.
Sometimes a case zips through, but we all know that doesn’t always happen. And, by the way, you’re the only one in the entire process with a monetary sense of urgency. You want cases to close as quickly as possible.
Q: “What percentage of cases fail to close?”
A: Industry estimates indicate that about 30% of all applications for life insurance don’t close and wind up in an advisor’s dead file, or require another application with a different company. That means that you could belosing one-third of your revenue every year. Here are some of the reasons why so many cases never close:
- Incomplete and/or inaccurate field underwriting.
- Client has a health change during the underwriting process.
- Application is sent to the wrong company based on the applicant’s medical history.
- Inadequate medical information. A client may not be aware of a medical condition so it never gets on the application. Or worse, they may fail to disclose pertinent information to the advisor.
- Incorrect medical information.
- Cases get postponed, sometimes indefinitely.
- Cases are rated and clients refuse to pay a higher premium
- Cases declined by insurance company.
- Advisor quotes a better rate than the client can qualify for.
Q: “Are you suggesting that a percentage of these cases can be ‘revived’ or ‘rehabilitated’ and reopened?”
A: Yes. There are reasons why some cases get shelved or postponed. For example, a client can’t move forward at the moment because a medical condition is discovered. But, most likely, the app was sent to the wrong insurance company. It isn’t long before the files pile up, gather dust, and are forgotten.
When this happens either clients don’t get the coverage they need or another advisor picks up the pieces and comes up with a solution. Either way, you’re not getting paid for the work you have done.
Yes, some cases are out of an advisor’s control, but not all of them, particularly those sent to the wrong insurance company. After getting a new set of eyes reviewing the apps, an alternative solution can often be found that satisfies the client’s objectives.
For example, you take an application on a prospect that you feel can qualify for the best underwriting class. During the fact find, you discover that he is taking blood pressure medication, but his readings are well controlled. The company you quoted, based on the one having the lowest cost at best underwriting class, doesn’t allow applicants to be medicated to control blood pressure. You end up with an underwriting offer that increases the cost and you have over promised and under-delivered to your client.
Had you applied first to Company B, one that allows the best underwriting class for treated hypertensives, you could have had a lower premium and a better rate class than Company A. Now, to try to save the case, a new application is needed for Company B, creating further delays and diminishing the likelihood of placing the business.
When analyzed, a majority of the apps with problems, including those sent to the wrong company go back to field underwriting issues that were created by not asking the right questions.
Even so, this doesn’t mean such cases can’t be revived. In my experience, we can go back to an insurance company or to a different oneand find a way to rework it so it meets a client’s objectives.
There are so many life insurance options available today, along with changes in insurance company programs and underwriting, that advisors need an advocate who can intervene and come up with an alternative solution that theycan take back to the client. It’s nearly impossible to stay on top of these changes and how they can adversely impact your clients.
Some cases may require that you touch base with the applicant in six months to a year later to see if conditions have changed with their insurability. Be sure you have a contact system in place to reach out to them. In cases like this, you can generally offer accidental death protection as a short-term fix until their medical or nonmedical underwriting situation improves.
• More from Greg Schwabe:
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