One Advisor’s Experience With Accelerated Underwriting

25 minutes. That's all the time it took for a client to be approved preferred plus for $1 million of life insurance.

Less than half an hour from the time I got off the phone to solidify her insurance design to the time her policy was approved. The case was issued the following day, and the policy was in force within minutes of our delivery videoconference.

In January 2020, I canceled a trip to Southeast Asia. It was a decision I did not make lightly but, ultimately, I did not want to be “Patient 1” and spread COVID-19 in Northeast Florida. What followed shortly after was like a Hollywood movie about some virus wiping out humanity. As we all know, in early 2020 the world just shut down.

My kids went on spring break not knowing they would not return to the same class. As Floridians, we are prepared to work remotely in the event of a hurricane. Our office functioned without disruption when stay-at-home orders were put in place throughout the country.

Insurance companies flooded my inbox with memos about COVID-19. Carriers imposed travel, age and health restrictions, and temporarily put a halt to accepting people ages 70 and older for coverage. In some cases, younger people ages were not accepted for coverage if they were not a true standard risk.

People who are highly rated or those who have medical conditions such as heart disease, significant history of cancer, pulmonary or autoimmune diseases and diabetes were temporarily unacceptable for coverage. Some carriers issued a blanket statement that stated they would not accept people who had any medical conditions or treatments that would make them susceptible to COVID-19.

In addition, the regulatory restrictions and economic consequences that came with the pandemic forced some insurance companies to re-price products or take them off the market completely.

By the summer of 2020, it was evident that the pandemic brought about a change that was long overdue. Insurance carriers were forced into the 21st century.

Some quickly adapted, while some are still lagging. The early adaptors poured huge investments into technology and upgrading antiquated and legacy systems that hindered the innovation required to process business in a different fashion. Compliance processes underwent major overhauls to cater to the new way of doing business. Staff learned how to work from home.

The tried-and-true way of doing business in person was obliterated overnight. Insurance advisors had to learn new ways of communicating with clients.

The use of videoconferencing exploded while emails and social media were overloaded. Some states threatened to rescind licenses if an agent sold life insurance in person!

I know of some amazing insurance advisors who decided it was the perfect time to retire. Some opted for early retirement. Perhaps the pandemic made them realize that life is too short. Some candidly expressed the fear of having to learn new technology and ways of doing business. In their cases, it was easier to throw in the towel.

Then there are those who are “business as usual” during a pandemic. My client who was approved within minutes of my presentation is no longer an anomaly — partly thanks to accelerated underwriting.

What is accelerated underwriting? The answer depends on who you ask. Simply put, it is not your traditional way of underwriting, and it also is not for everybody.
To qualify, the client must satisfy the carrier prerequisites based on health, age, face amount and product. Most programs require Medical Information Bureau reports, prescription drug history and motor vehicle report checks.

Some carriers add their own requirements and a caveat stating, “Everything is at the discretion of the underwriter.”

Some carriers pull random cases out of the program and move them to traditional underwriting even if the client qualifies.

What products are acceptable for accelerated underwriting? Permanent and term insurance. Some carriers allow one, both or very specific products.

What is the turnaround time? It ranges from instant approval to up to two weeks.

What is the maximum face amount eligible? Most carriers allow up to $1 million, some up to $2 million and a few allow up to $3 million.

What ages qualify? Mostly those between the ages of 18 and 65. A few carriers allow up to age 80.

How do you submit applications? Paper, e-application, customized URL, drop tickets, phone interviews or any combination of such. Some carriers mandate how they want you to submit to qualify for their program, and some give you the freedom to choose.

Although accelerated underwriting is not for everybody, today’s successful insurance advisor must be well-versed in all aspects of it. The investments that carriers have put into technology and the process overhauls that have been done as a result of the COVID-19 pandemic warrant your giving accelerated underwriting a second chance if you had a bad experience with it in the past.

Here are my top four pointers to remember when using accelerated underwriting programs.

1. Conduct due diligence and do what is in your client’s best interest.

Thorough field underwriting is the key to avoiding unpleasant surprises. Carrier A may offer a client with a family history of heart disease preferred plus, but Carrier B may not. Asking the right questions and the tough questions are critical.

The last thing you want is for your client to finish underwriting only to realize at the end that one simple question in the beginning such as “Have you had any DUI or DWI charges in the past five years?” may have pointed you to the right carrier that would give the client a better offer than the “spreadsheet winner” you picked.

2. Learn how to use videoconference applications.

It helps when communicating with your clients, and it also satisfies most carriers’ “face to face” requirements. With many people still staying at home, it is vital that you “see” your clients. Use any of the many video services and devices out there.

My friend Bruce has been successful in the insurance business for 34 years. He was accustomed to traveling and conducting marathon in-person meetings. When the pandemic hit, he was forced to work from home. Long story short, he now tells me how much he loves working from home, not getting onto planes, and using video to communicate with his clients. Less airplane and more golf time for Bruce!

3. Process new business remotely and securely.

Security and confidentiality are paramount to your success, so you must have a way to communicate and transmit electronic documents securely.

One of the biggest mistakes you can make is to be cheap when it comes to hiring a technology person. You may find yourself signing up for the latest and greatest only to find out you didn’t sign up for exactly what you need.

Do not just find a “halfway decent” technology person. Find a truly competent person whose work speaks for itself.

I once worked with a successful advisor who plateaued in his career. When I tried to explain to him that his way of doing business is obsolete and that he should “invest” in a competent technology person, he resisted with all his might. Are you wondering what happened to him when COVID-19 hit?

4. Be comfortable using online resources to check and follow up on your cases.

Nobody likes it when someone calls at 4:58 p.m. asking for case status or forms needed for a 5:30 p.m. appointment. Learn how to use the carrier website and check and follow up on your cases to avoid having to chase down home office staff very late in the afternoon or after business hours.

Know that sometimes accelerated underwriting is not only for the super young and super healthy. Taking advantage of these programs could prove to be beneficial when used properly. It makes the insurance procurement process much shorter and a more modern experience.

“I enjoy putting my clients through 90 or more days of underwriting,” said no one ever.

Peachie G. Thompson, AALU, ALMI, ACS, is founder and CEO of Peach Insurance Services, Ponte Vedra Beach, Fla. She may be contacted at [email protected].