Our office has always been about getting the job done for our life insurance clients and getting a policy in force as soon as possible. I could probably be labeled a little obsessive compulsive about the application process, but I believe my logic is sound. Beneficiaries don’t get anything from applied for life insurance. They are protected when life insurance goes in force.
A little disclaimer here. There is a way to be covered during the application process through what’s called a temporary insurance agreement. I do occasionally use this tool, but I use it sparingly. Most of the big on line agencies won’t take an application without the agreement and a payment to bind it. My thought is that if someone really feels the need to cover a short period, well, by all means we’ll do that. Other than that I have never taken money up front on an application. The money up front thing is an often abused sales psychology tool.
The psychology of having paid money, whether it would make you feel this way or not, works very well in most cases. Having paid, subconsciously you have purchased. This means that if a policy is approved at a rate other than the one you expected, you are more likely to accept it. It also means that even if you find a better deal during the underwriting process, you feel bound because you’ve “already purchased”. If you paid money up front it is fully refundable for any reason, but that isn’t always made clear. While the temporary insurance agreement isn’t always used for this purpose, I’ve discussed time and again how the large on line agencies are all about not wasting time and doing all they can to make sure they can secure the sale. For them this is just one more tool.
I will be getting to the question at hand, “how long does it take?”, but bear with me for a few more minutes on this aspect. I think it’s important. Keep in mind that if a person feels like they need temporary life insurance, I don’t hesitate to provide it, but the flip side is that I don’t take money so that people will feel locked in. I like to shop a case, process the application, deliver an approved policy and then, if the client is please with what they have in their hands, take premium to put it in force.
Sorry for the little diversion there, so on to the question of how long the application process should take? If you say “Ed, let’s do it”, how long before you see an approved policy. Today is Thursday. If you told me you were ready to move ahead today I would either take the information over the phone or have you fill out an on line application request form, either of which takes about 10 minutes. Once I have that information you receive an actual application for signatures later today. Tomorrow you are contacted to schedule an exam and, being Friday you could likely do that over the weekend. If you also send back the application signature pages over the weekend I download the exam on Monday or Tuesday and everything is sent electronically to the home office. So, in 6 days you have a file set up and ready to underwrite. If there is no medical history and your labs are good you could be approved within a few days and a policy issued before the next Friday. I would have that policy in your hands usually within a week to 10 days, so 18 days from saying go you have a policy in hand. With the magic of eft and scanned documents you can put the policy in force immediately, so best case start to finish is about 3 weeks.
So why then does it take longer, sometimes much longer to get approvals? The first black hole in the process is you. Yes, you, the customer is always right person. We all have a tendency to do things at our own pace and the 3 week scenario above is an application process that is done at my pace with a client who is on board for getting it done and in force as quick as possible. I’m not saying that people that move slower are bad, but they do change the equation. Add a couple of days or a week to decide which quote to go with. Then add a couple of days or a week to get the application information in. A lot of people like to put those things off to a weekend even though it only takes 5-10 minutes. Then add a few days to a week or two to get an exam scheduled and done. It probably won’t add any time to get the application back in. It kind of get absorbed in the exam process. Then everything is off to the home office. So, we’ve added 2-4 weeks to the process of getting the application to an underwriter. If the approval is quick again and I get a policy out to you quickly, the often it will take people a few weeks to look over the policy. Nothing wrong with that. Everyone is looking for the fine print even though there isn’t any. Truth be told though, a term life insurance policy is about a half hour read. Very straightforward and uncomplicated. So now 3 weeks is 7-9 weeks.
Then comes the really big black hole….MEDICAL RECORDS. Easy is when there is one set of records and a cooperative doctor. You barely even notice that in the process. Harder is when there is more than one set of records but the doctors only have a copy service come once every few weeks and, of course, our request got there the day after they were just there. Harder still is when we have to wait longer to get records and in those records it says you were referred to another doctor for something you forgot about. So we have to order those records. And then the very hardest is when we work and work to get records that lead to more records that contain a recommendation for testing that you decided not to do. At that point everything comes to a screeching halt while you either complete the testing or get a second opinion saying you didn’t need it. The last scenario 4-7 months.
Bottom line. It’s going to take as long as it takes to get the job done. There’s a lot the agent can do to make sure it goes smoothly and there’s plenty you can do. My average case takes under a month and I have, knock on wood, never had anyone pull the plug because it was taking too long. If you have any questions, or are wondering if your agent is doing their end right, call or email me directly. Let’s talk.