Life Insurance Application Process – Part Five!

So, what happens if the approved life insurance application isn’t at the same rate you were quoted? This happens a lot when you use agents that don’t shop cases before they choose the right company. Less frequently it happens when new information comes up in underwriting that neither the proposed insured or the life insurance agent knew about.

Shopping is kind of like writing a cover letter to the underwriter. Divulge it all up front and it takes all of the aha and gotcha out of a life insurance underwriter’s game. The key, I believe, to shopping is that you put that information out to a lot of companies and each company knows they have one chance to earn the application so they give it their extra best shot. They want to earn the business so they are often willing to take the chance on a little better offer than a client might otherwise get.  If it isn’t shopped a life insurance application will be underwritten by the guidelines without any wiggle room.

But back to the subject. You’re approved and the rate is higher than you expected. What now? First is my call to the underwriter to determine exactly the reason for the change. Is it something that can be corrected? Is it something, like a lab result or family history that another company might do better with? Is it something in the medical records that the client wasn’t aware of? Once we have the facts and know what prompted the change we know where we stand on being able to get a reconsideration back to the original quote. If that’s possible we start working on that right away and get the policy re approved.

Then there’s the possibility that your rate has changed for a valid reason. It’s not unusual to find out there is information in your medical records that is incorrect or that you weren’t aware of and it’s always possible that lab results don’t come back quite the way we had envisioned ourselves. Cholesterol too high, etc. It’s now that it’s extremely important to remember that when you applied for life insurance you did that because you felt like you needed it. This is where so many people lose focus of that fact. The price goes up and they feel wronged and they forget that the need hasn’t changed. So how can we work with what we’ve been dealt and keep your budget intact?

The first question is, do we think we can do better with another company? If the answer is yes then I recommend putting the policy in force at a term length or for an amount that works within your original budget. Then I’ll shop it and replace it with a better price policy if we’re able to  get one. Always, always put something in force if you’ve been approved. It may rub your ego the wrong way, but something is always, always better than nothing when it comes to life insurance and if you died or became uninsurable before we could get an approval from another company, well, you messed up.

That’s it, life insurance application process from start to finish. The amount of time you have actually had to be involved might be two hours, less than it took me to write the five blog posts. If you have any questions or have been approved at a rate you don’t like and your agent won’t shop it for you, call or email me directly. My name is Ed Hinerman. Let’s talk.