Discover the Impact that Underwriting Advocacy and
Policy Management Can Have On Policy Pricing and Performance
Clarification of medical details results in a favorable rating
Situation: A couple in their early 70s needed $30 million of coverage for their estate plan. The husband was uninsurable due to multiple heart attacks. The wife was also considered uninsurable due to obesity with a history of multiple “mini-strokes”, high blood pressure, asthma, and sleep apnea.
Approach: After reviewing the case, the Underwriting Advocacy Team determined that the wife might be insurable. They worked extensively with the wife’s physician to demonstrate that the “mini-strokes” were, instead, migraines. They showed that the wife’s high blood pressure was well controlled, and the asthma and sleep apnea were mild.
Result: $30 million of coverage was issued at standard (vs. rated) rates.
A strategic approach to securing underwriting through multiple companies results in a more efficient insurance portfolio
Situation: A couple in their early 60s with a net worth in excess of $100 million needed $50 million of coverage at a more efficient price. They had $30 million of coverage in force.
Approach: Coordinating the applications for coverage with multiple companies was essential in this case. The Underwriting Advocacy Team first used a private inquiry process to secure initial offers from the companies. Secondly, they coordinated three applications in phases to avoid exceeding carrier capacity limits. Lastly, they arranged to have the clients examined only once for all three applications.
Result: $50 million of joint coverage at preferred rates which increased the overall efficiency of the couple’s insurance portfolio.
The addition of contextual medical information clarifies medical history and results in a favorable rating
Situation: A 60-year-old male diabetic needed $2 million of coverage. He had a history of burst vessel in his eye and also an abnormal amount of protein in his urine (an indication of a possible kidney problem).
Approach: The Underwriting Advocacy Team reviewed the client’s medical records and highlighted the client’s excellent history of diabetic control and normal urine findings. They also provided a detailed summary of the client’s medical records, which reduced the amount of assessment time required by the insurance company underwriters.
Result: A standard offer was received for the entire $2 million of coverage. The Underwriting Advocacy Team’s knowledge of which carriers viewed diabetics favorably as well as their ability to address the abnormal protein finding were critical in securing coverage at standard (vs. rated) rates.
Guaranteed products need to be continually monitored and managed. The slightest deviation from the policy plan can cause a guarantee to go off track.
Situation: A 50-year-old entrepreneur purchased a $2 million Guaranteed Universal Life policy with an annual premium of $50,000 and a lifetime guarantee.
Challenge: In Year 2, the premium was two weeks overdue and the entrepreneur received a termination notice from the carrier giving him the option to pay $50,000 and receive a one-year guarantee or pay $145,000 for a lifetime guarantee.
Upon investigation, the advisor learned that the late payment had automatically caused a rate change that would have cost the entrepreneur $95,000 to reinstate the lifetime guarantee.
RESOLUTION: We were called in and were able to leverage our relationship with the carrier to reinstate the lifetime guarantee without additional premium. Of note, had the policy been originally supervised by the policy management team at NJL&C, this situation could have been avoided due to proactive services such as premium alerts and advance notices.
Over time, sustained low interest rates can significantly affect the performance and guarantees of many different types of insurance policies.
Situation:A recently-retired, 65-year-old corporate executive purchased a $3 million Universal Life policy for a single premium payment of $850,000. The original policy was projected to sustain the death benefit to age 100 based on the current interest rates.
The client, who is now 85 years old, was notified that his policy is projected to lapse at age 89 due to the sustained low interest rate environment.
Challenge: The carrier gave the client the choice of paying an annual premium of $129,079 to extend coverage to age 95, or $173,338 per year to extend coverage to age 100.
Take Away: This particular product design has the greatest risk of lapsing early due to the current low interest rate environment. If the policy would have been monitored more closely over the years, early intervention could have significantly reduced the amount of premium required to maintain coverage until age 100.
*Case Studies are for illustrational purposes only, actual results may vary depending on your personal and unique situation.