Life Insurance
How to Quarterback the Large Life Insurance Case
by Denise Desautels

A quarterback approaches the field with a full game plan rather than a single play. A broker who’s working on a large case should also see it as a multi-stage process. There’s too much potential for gridlock in the reinsurance market for you to take a scattered shotgun approach to the large case. When writing a large case, you need to anticipate factors that will yield favorable underwriting considerations based on medical history, financial ratings, and product competitiveness.

When you meet with clients to do fact-finding and discuss goals and objectives, product options and health issues may also be discussed. Pay special attention if a red flag arises about a health issue. It is very helpful to identify a potential underwriting challenge like this early on. It will be a factor in deciding to which carriers to apply.

 The top medical challenges are coronary artery disease, cancer, and diabetes. It is essential for the broker learn the date of the diagnosis, treatment details, care path or surgical procedures, and any pertinent test results, such as EKGs for coronary artery disease applicants, cancer stage or grades, and blood glucose and glycohemoglobin A1C results for diabetics. Get the names and contact information for those who performed treatments and tests.
A client’s lifestyle can also be an important factor. Underwriting is not an exact science, as we all know. The underwriter often has a range in mind when reviewing the paperwork. If you can supply additional lifestyle information that is not on the attending physician’s statement or in the test results, it may make the difference between standard and preferred rating or standard and table rating

It may be helpful to include a detailed cover letter with the application with the following type of information: “The client walks four to fives times a week and has a regular golf game two times a week.” It illustrates that the client has a very healthy and active lifestyle, which helps position the case in the best possible light.

Once the fact-finding is complete, the next step is to determine to which companies to apply. This is an even greater challenge since not all companies make the same underwriting offer based on the same set of facts. Certain insurance companies have a track record of doing a better job with certain health histories, which translates into offers that are more favorable for the client. Some offer better rates for cardiac risk; others offer better rates for a cancer history; and still others offer better rates for elevated PSA levels. Carriers’ rates can range from a standard rating all the way to a table six for the same patient with the same information. This wide variation in offers occurs frequently in the large-case marketplace.

When putting a case together, it is important to have a clear understanding of retention limits, auto-binding limits, and jumbo limits. A broker who is not aware of these issues can face major stumbling blocks. The re-insurance marketplace has been shrinking over the last few years. This is a trend that will likely continue, making it more difficult and critical to understand how to piece together large blocks of coverage.

Retention limits come into play when you are seeking a large face amount. You must consider these limits when determining to which company to apply. Retention limits differ among carriers depending on the size of the carrier, type of product, applicant’s age, and mortality risk.

A company can also bind business automatically in the re-insurance pool without sending the file to the re-insurers based on the carrier’s own mortality guidelines. These auto-binding limits can be as little as $500,000 or as much as $50 million depending on the company. Factors that reduce these limits are age, mortality risk, and risk type, such as aviation or foreign travel.
Also factoring into the decision are jumbo limits, which are the sum of all in-force coverage pending, regardless of what is being placed or replaced. These limits can approach $65 million with certain companies and for certain age categories.

After you have researched potential underwriting offers and company retention, it is time to submit a formal application. Packaging a large case with a well-documented cover letter will help. The well-thought-out letter anticipates questions the underwriter might come back with concerning other companies you have applied to and the total line of coverage for which you have applied.  The cover letter should include the following:

The reason for the coverage.
The type of coverage for which you are applying.
The face amount and how it was determined.
Retention limits if you are applying with other companies.
The total line of coverage being considered (retention issues).
Information on other offers the broker has received.
Whether the coverage has been rated in the past.
Current in-force coverage, if any.
The cover letter gives the case a clear direction and answers many of the questions that would have gone back and forth between the underwriter, the brokerage office, and the broker.
In summary, it takes a clear game plan and knowledge of the underwriting process to get a large case completed successfully for the client and the broker.
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Denise M. Desautels is vice president of Brokerage Sales at First American Insurance Underwriters Inc. of Needham, Massachusetts. A former Olympic athlete, Desautels has more than 20 years experience in the life insurance field. She can be contacted at 800-444-8715, via email atddesautels@faiuonline.com, or on the Web at www.faiu.com.