Tailor-Made.

Agents can obtain life insurance for their special-risk clients through clinical underwriting, which treats all applicants as individuals.

One of the first things agents, brokers or financial planners discover in attempting to obtain life insurance for their hard-to-place risks is that they often arrive at a dead end. This doesn't always have to be the case--not if they first seek out an insurer who practices clinical, or tailored, underwriting.

This system, which runs counter to the mass-oriented risk-classification approach practiced by the majority of life insurance companies, treats all applicants as individuals, much as a doctor does. And because it does, and relies on the latest medical information available, those individuals highly rated or denied life insurance by other companies often are issued the much needed coverage.

Any doctor can explain there's no such thing as a "typical diabetic." Nor are there individuals with textbook cases of a heart condition, cancer drug and/or alcohol problems and other illnesses. Each case, each individual is different. Many of these people are living healthy lifestyles, receive regular physical checkups, see their physicians regularly, follow their doctors' orders and are determined to continue to do so.

Further, many of them are well on their way to recovery or have been cured. So when their doctors tell them they're OK and they are turned down for life insurance, they want to know why. The reason: Their insurance/financial adviser often comes up short.

Again, this doesn't necessarily have to be the result. Clinical underwriting involves obtaining the needed information about the applicant's individual and family medical histories, continually checking on medical breakthroughs from top sources and--this is key--individually underwriting each risk within the underwriting manuals.

A More Informed Approach

Basically, clinical underwriting isn't a more liberal approach; rather, it's a more informed approach.

It has worked well for savvy life/health insurance agents and brokers for more than 10 years, as it will for the ever-growing number of property/casualty agents now cross-selling life-health products.

In fact, this underwriting approach also worked extremely well more than 70 years ago--prior to the unveiling of standardized underwriting manuals used by most life underwriters, which herd all applicants into one or more of 18 or so risk classifications. These underwriting manuals, some five or more years old, can't take continuing medical breakthroughs into consideration and, because they don't, many people who could have been issued life insurance have been denied the coverage.

And while it must be acknowledged that this mass-oriented, "cookie-cutter" approach has worked well for most of the industry, it also has been long evident that it hasn't been any help to millions of individuals classified as impaired risks, many of whom should long ago have become life insurance policyowners.

It's not possible for underwriters at most companies to spend time and resources to go beyond the manuals. But with applicants being shoved into group classifications, along with their mortality statistics, the result is not a pretty picture to special risks or their agent, broker or financial planner.

This nonpersonalized approach begins, as most financially related services do, with a completed application. In most cases, a decision can be made quickly to accept or reject the application. But in circumstances where more information is needed before the underwriter can render a decision, both delay and expense become part of the process. During this stage, the likelihood of coverage being issued declines.

Shopping Around

Any insurance agent or financial planner naturally wants to do as much as possible to obtain coverage for the client or prospect as soon as possible. And it's at this point that they start shopping the case to other carriers. These other carriers, in turn, often recognize prospective business that has gone through the underwriting process of another company.

Such cases usually have substantial information related to the risk that makes another carrier's job easier. Yet, there's also usually a challenge--many of the applications present longevity risks that seem ambiguous or threatening when reviewing the case.

Through clinical underwriting, the ambiguities and threats can be greatly diminished, because each case is treated and evaluated on an individual basis. Therefore, by isolating features of an applicant's health, environment and lifestyle, many people who may have been considered poor risks suddenly become acceptable risks.

Clinical underwriting uses the most advanced medical information available to evaluate the individual circumstances of applicants that other companies consider substandard.

An Individual Approach

You could say that the clinical underwriting approach is similar to custom-tailoring a suit, as opposed to offering a one-size-fits-all selection. And you could also say correctly that underwriters involved in this process treat each applicant fairly and individually.

There are many agents, both life/health and property/casualty, plus brokers and financial planners with impaired-risk cases. What many of them may not know is that their efforts to obtain life insurance for such clients and prospects don't always arrive at a dead end. Through clinical underwriting, there is an avenue open to them that is very worthy of pursuit.

The customer always comes first, and that person should be treated by all within the industry as an individual, with courtesy. And if within the industry, life insurance applicants can be treated kindly with a caring personalized service--and they can be--they and those of us who represent them and the industry will be much better off.

It's certainly not news that life insurance is a must for most people, and it, therefore, should be included as an important part of an agent's, broker's or financial planner's portfolio. Yet an often superior package created and designed for the prospective client can quickly become unwrapped with the revelation that the applicant has been turned down for life insurance due to his or her medical history.

It's time for all industry marketers to serve all prospects--and that certainly includes hard-to-place risks.

Paul P. Aniskovich is president and chief executive officer of US. Financial Life Insurance Co., a nationwide insurer based in Cincinnati and member of the MONY Group Inc.