When it comes to selling disability income insurance, I'm not sure which is the bigger obstacle: the overall lack of awareness among the general public about this much-needed income protection product or the persistent belief in DI underwriting "horror stories" on the part of producers.
As an underwriter, hearing objections about how "difficult" and "risky" it is to subject clients to the "intrusive" DI underwriting process can be tough to take because, indeed, I occasionally have to be the bearer of news that may be disappointing to producers and their clients.
But I'd like to offer my take on the matter. Hear me out and, by the end of this article, I hope you'll agree that, more often than not, such objections are based on myth, not reality…and that buying into those myths could be a grave disservice to the clients who trust you to help them protect their financial well being.
Myth #1: Disability underwriting is more difficult than life underwriting.
Disability underwriting is different than life underwriting, for all the reasons that morbidity is a profoundly different actuarial notion than mortality.
There are no gray areas with mortality. You're either dead or you're not. Years of mortality data have resulted in actuarial tables that are stunningly accurate predictors of how many people are likely to die at a given age.
Morbidity, on the other hand, has many more variables to take into account. Predicting when, or whether, a pre-existing medical condition or occupational factor will lead at some point in the future to a non-lethal disability–not to mention predicting how long that disability will last–is a much less exact science.
Keep in mind, too, the possible total indemnity a DI carrier may face with a disability claim. Thanks to advances in medical science over the last two decades, disabilities that used to be fatal can be managed for years. What may look like a $5,000 benefit to you could represent millions to your DI carrier over the lifetime of a claim.
All of which means that DI underwriters require a different level of information than their life counterparts.
Myth #2: I have no control over the outcome. Everyone knows disability underwriting is ruled by a bunch of home office underwriters who've never been in the real world.
I'll meet you halfway on this one: You're right that the vast majority of home office underwriters have never walked in your shoes. Indeed, most (and I count myself among them) know themselves well enough to know that they could never do what you do each and every day; they're simply not cut out for the competitive world of sales.
What they are cut out for are details. The more details to absorb and deliberate over, the better. But, since we've already established that they don't have what it takes to go out there and gather those details themselves, they rely on you to be the company's eyes and ears.
You've heard the term "field underwriter." When it comes to a high-risk product like DI, home office underwriters really do consider you to be their peers in the "real world." As you've no doubt gathered by the points I've raised above, we depend on you to represent the risk of each application accurately. The more you can tell us about your client, the better job of underwriting we can promise you.
Myth #3: Disability underwriting is a lengthy process.
Submitted properly, a DI policy can be underwritten and issued almost as quickly as a life policy. Like many in the industry, my company has invested tremendous resources toward reducing policy issue cycle time–defined as the measure of time from the point at which an application is received until the policy is issued and mailed–so that policies are placed more quickly.
We also have established a "jet issue" unit–essentially a hybrid of our new business and underwriting areas–to more swiftly process applications from our top-tier, high-volume DI producers. But efforts in the home office are only part of the solution.
The speed of DI underwriting is greatly enhanced by the consistent field practice of these three basic principles:
1. Make sure your applications are complete (i.e., legible and all questions answered).
