“I Gotta Guy/Gal” calls and inquiries are our stock and trade at AgencyONE! As you know, every case is different both medically and financially, so we need to do a LOT of due diligence work to provide prudent advice. Upon receipt of ANY new inquiry, it is VERY important that we consider all options, not just new life insurance coverage. Does an opportunity exist for conversion? Could the client potentially apply for a rating reduction on their existing policy? Is a life settlement an appropriate action to take? A client’s health and financial circumstances can change at any time. With that in mind, the AgencyONE Team is equipped with the knowledge and resources to assist you and your client through whichever path they decide to take.
This ONE Idea will explore various options for your “I Gotta Guy/Gal” and discuss 2 recent case studies.
The good news is that COVID restrictive underwriting is gone, for the most part, and the pendulum has swung to a much more aggressive underwriting position with several of our carrier partners. Lifestyle and health style underwriting credits ARE BACK! While you MAY refer to them as TABLE SHAVES, the carriers and reinsurers don’t call them that. So, our AgencyONE 100 advisors SHOULD look at the mildly substandard cases from a few years ago AGAIN. There are some VERY strong NEW product solutions now available with longer guarantees coupled with GREAT UNDERWRITING!
Option 2 – Rating Reduction
We are often asked to review cases for rating reduction considerations and are happy to do so, but generally, these situations require FULL UNDERWRITING again. With newer product solutions and more options for clients to choose from, a successful rating reduction request can often result in NEW COVERAGE or ADDITIONAL coverage being accepted. The possible addition of a Long-Term Care Rider is an important example.
Option 3 – Conversion
This one can be tricky as many carriers are now limiting conversion options to certain product lines in the near term with a limited product solution line option for later conversion years. Our AgencyONE 100 Advisors MUST pay close attention to the conversion year options of their clients’ existing inforce term policies.
This should be considered a very real and viable option for ANY client who is over age 70 and has an existing policy. Life settlement valuations are based upon life expectancy calculations which factor in the client’s health and anticipated year and age of death. In general, the older the client, the shorter the life expectancy.
Case Example Mr. Smith – Life Settlement
Our first client, Mr. Smith, is 73 years old. We previously underwrote and negotiated a STANDARD issue a few years ago. We issued and placed in force two permanent policies. Recently, Mr. Smith advised that due to changing financial circumstances, he is unable to afford the premiums going forward and wants to consider other OPTIONS for his existing policies.
Mr. Smith was underwritten for a $3 million business policy need and a $1 million personal insurance need at age 69. His compensation the previous year was over $500,000 so premium payments were not considered prohibitive. However, the business became wrapped up in litigation 2 years ago with our client as the plaintiff. At age 73, Mr. Smith’s health status has worsened to the point that new underwriting would not be a consideration. He is looking for options to reduce the premium payment while trying to maintain protection. A Life Settlement of the smaller $1 million contract will free up enough cash flow to help him maintain the existing $3 million of permanent inforce coverage for at least several more years while his litigation moves forward.
Our second client, Mr. Jones, came to AgencyONE when his policy was in the Grace Period of its term conversion. He wanted to maintain coverage but did NOT want to pay the exorbitant term premium at the conclusion of the term and wanted to convert to a permanent policy. If we could provide NEW evidence of insurability, we could take advantage of the new table shave/crediting underwriting and rider considerations. After an AgencyONE Informal Inquiry was filled out and a HIPAA signed, medical records were gathered, the exam and labs were completed, and the rating reduction request was submitted. It was determined that Mr. Jones’s health status had IMPROVED since underwriting the initial term policy. The rating reduction was GRANTED AFTER some important negotiations by AgencyONE. The conversion form was submitted to our carrier partner and the case was paid for THIS WEEK. The client is ecstatic and so is our AgencyONE 100 advisor!
AgencyONE works diligently to advocate on behalf of your clients. We encourage you to take the time to review inforce policies for the possibility of new coverage, rating reductions, conversions, or life settlements. This is an opportunity for you to possibly improve your clients’ inforce coverage AND perhaps increase your Q4 business.
Please contact the AgencyONE Underwriting Department at 301.803.7500 for more information or to discuss a case!