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In the interest of full disclosure: if your potential client doesn't provide a complete medical picture on an insurance application, it can affect the rating, your relationship with the underwriter and the success of the case. Here's how to make sure that doesn't happen.

You have a great product and a great prospect. You get an appointment, complete an application, order medical requirements and submit the case to underwriting ... yet the decision is a rating. You wonder, "What went wrong?" But the real question you need to ask is, "What should I have done differently?"

The most overlooked step in the life insurance sales process is putting your applicant in the best purchasing position possible. Getting into that position starts with gathering the right medical information during the application process. Without that information, your client will lose the opportunity to get the best deal--and you'll lose money.


During the application process, either formal or informal, it is your responsibility to stress the importance of full medical disclosure to your clients. As an underwriter, I routinely run across applicants who don't understand the significance of certain medical impairments. Let's look at one real life situation--the kind of situation it's your job to avoid.

An applicant goes to a producer's office to look at purchasing simple term life. During his conversation with the producer, he says he has no medical issues at all. The producer thinks the case is a slam dunk. Because of the face amount and his age, I, one of his firm's underwriters, order the necessary attending physician statement (APS) reports. I quickly discover that the applicant had a transient ischemic attack (TIA), a type of stroke. Surprise! The producer called the applicant, who explains the TIA occurred 15 years ago and it was due to a heart defect. Heart defect? Surprise!

Inquiring further, the producer find outs the applicant was born with an atrial septal defect that was found after the hospital ordered an echocardiogram during the TIA treatment. The applicant's doctors told him that the TIA was a direct result of the defect.


Because the defect was surgically corrected, the applicant doesn't believe he has a medical problem.

Let's assume this medical omission wasn't caught before the producer sent the case to the carrier. The carrier's underwriter reviews the application and exam, which shows no indication of any medical problems. The underwriter then chooses to review APS reports and finds the problem. The result of the producer's poor preparation and planning? His worst nightmare: An underwriter on the defensive.

Underwriters have a difficult job and they have to be suspicious of medical information to perform their jobs effectively.

An omission may be an honest mistake, but to the underwriter it's just not that simple. As a producer you'll have a lot of explaining to do when the underwriter starts to question you and your client's honesty. More importantly, how will they feel about you, the producer, moving forward? In a relationship-based industry, one poorly prepared case could result in underwriters taking a more conservative approach to your future business.

Filling in the holes

Clearly and persuasively explaining to clients that full medical disclosure will help position them favorably in front of a carrier isn't always easy. To some clients, it may even seem counterintuitive to provide information on certain medical issues. When I was in sales, I started explaining the concept with a simple metaphor: Every applicant is a jigsaw puzzle. As the underwriter pieces together the information provided, it creates a picture of the applicant. When information is missing, it leaves a hole. And that hole can lead the underwiter, whose decisions are already very subjective, to have misperceptions that aren't in the client's favor.

But no matter how you explain the concept of full disclosure, you have to help your client prepare and prepare yourself:

Give your clients homework. Prior to starting the application process, ask your clients to identify physicians seen in the last 10 years and get their phone numbers. Not only does this process gather much-needed information, it forces the client to reflect on medical issues they may have forgotten. Remind them that no matter how insignificant an incident was, it could prove to be very valuable information.

Gather attending physician statements for delivery to underwriting. To gain more control over the mortality assessment, you can gather APS reports for delivery to underwriting. This allows you to obtain the information that will tell the full story and allow you to package a complete file prior to submission to the carrier.

Take advantage of staff underwriters. Some producer groups and firms have underwriters on staff. If you do, use these underwriters to get valuable insight into an applicant's medical history and to strategize. A good underwriter can identify possible pitfalls and areas of concern, as well as work with you to get a letter from a physician to clarify or better position information. Case in point: One applicant's physician stated an "overuse of alcohol." The client's application was declined. The client called another agent, who contacted me, one of his staff underwriters. I called the physician and asked for his definition of alcohol overuse. The physician defined it as more than one drink a night. The physician then sent a letter clarifying that the applicant was having two drinks a night--which by underwriting standards is perfectly acceptable. The applicant got super-preferred and the producer got a commission over $50,000.

Eliminate embarrassment. One large hurdle to full medical disclosure you'll often run into is embarassment. Some clients may not feel comfortable sharing personal medical information with you. Consider having a staff person in your office complete the medical portion of the application over the phone. This can put a client in a less-threatening position and their comfort zone will greatly increase. And when clients are comfortable, they'll generally disclose more.

Remember, the underwriting process is a subjective art. How many times have you sent a case to three or more carriers and got different offers from all of them? A complete and well-positioned medical picture of a client can help position them--and you--for success.

Dan Stanley is the assistant vice president of Underwriting for PartnersFinancial, an integral part of National Financial Partners Corp., in Austin, Texas. Dan has worked in the life insurance industry for 18 years as a producer, underwriter and manager of operations for several insurance carriers.

Prepare applicants for the insurance exam

Providing these simple but effective tips to a client can increase underwriting success:

* Take your medications appropriately prior to the insurance exam.

* Schedule your insurance exam on a Wednesday, Thursday or Friday.

* Identify the time of day when you have the lowest stress level.

* Make sure you are well-hydrated prior to the exam.

* Don't drink coffee or other highly caffeinated drinks before the exam.

* Don't exercise prior to the exam.

* Don't take the exam if you have a cold or the flu.
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Title Annotation:INDIVIDUAL LIFE
Author:Stanley, Dan
Publication:Life Insurance Selling
Date:Jan 1, 2010
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