Note: This is the tenth article in a series of 12 discussing the benefits of using the Laser Underwriting Approach, which utilizes an agency-based staff underwriter. Each story in the series addresses one of the 10 preliminary questions that make this approach effective.
The Laser Underwriter Approach yields accurate life insurance quotes and keeps the underwriting process smooth by asking these 10 key questions:
- What is your client's medical history, including conditions, treatments, or medications?
- What is the amount of the application?
- What is your client's age, tobacco status, height, weight, and ability to live on his or her own?
- Are you in competition? What are the other companies, face amounts, and ratings?
- Do you have related applications with other companies? Did you already hurt your chances of getting the best offer?
- Will your client accept an increased premium?
- Are there any avocation, financial, aviation, or legal concerns?
- Is the amount of coverage appropriate for the client's financial situation?
- Are there any sensitive histories such as alcohol, drug, or motor vehicle problems?
- What is the importance of this client to you, such as being a center of influence who could provide referrals?
Here is why these questions are important. According to statistics recently published by the Centers for Disease Control, accidents are the fifth leading cause of death in the U.S., with over 120,000 accidental deaths in 2006. In fact, accidents are the single leading cause of death for those who died before age 45. Additionally, over 60,000 people died solely of drug or alcohol-induced causes in 2006, excluding those whose drug or alcohol use contributed to an accident.1
Thus, alcohol, drug, and motor vehicle problems are a major cause of death, particularly of younger people, that carriers must fully investigate in order to protect themselves from adverse risks. Additionally, long-term alcohol or drug abuse can contribute to a variety of other health ailments.
Given the importance of these issues in getting your cases issued, producers would be wise to recognize and get details when any of these issues are mentioned. You will fare better by being proactive and explaining any "yes" answers in advance, since the underwriter will view any alcohol, drug, or MVR (motor vehicle report) history as a red flag.
With a history of alcohol abuse, misuse, or alcohol treatment, the underwriter will want to get as much information as possible. This information could come in the form of the doctor's report, an alcohol questionnaire, and/or a cover letter. If there are no doctor's records, the underwriter will rely substantially on the questionnaire to be filled out, signed, and dated by the applicant, along with a cover letter to give detailed history of the whole situation.
The most important things to ask with alcohol history are:
a.) When did the applicant stop using alcohol completely?
b.) Have there been any times the applicant started drinking alcohol again after a documented time of quitting its use? How many times?
c.) Has the applicant been involved in Alcoholics Anonymous or any other support group that helps a person stay sober? What is the level of involvement? How often do they attend meetings, and do they act as a sponsor to new members?
d.) Were there any other issues in which the applicant was involved that went along with the alcohol misuse, such as drugs, any kind of family abuse, any kind of criminal activity, or job instability?
With a history of drug abuse, the questions to ask are similar:
a.) When and how did the history of drug abuse begin?
b.) What were the names of all the drugs of abuse, at what dates were they used, and at what dates were they stopped?
c.) Has the applicant been involved with Narcotics Anonymous or any other organization that helps a person with drug abuse?
d.) Was there a combination of drug and alcohol abuse at any time?
e.) Were there any other issues associated with the misuse of drugs, such as family abuse, criminal activity, or job instability?
The staff underwriter can help the producer by organizing the pertinent information together and presenting it in a cover letter that will put the applicant in the best possible light. The good information can be stressed in such a way that the carrier's underwriter may better see the applicant for who they are, not just their negative history.
