If you’ve spent any significant time writing fully underwritten life insurance, you clearly understand the impacts a medical exam can have on your placement timeline.
- Waiting for an attending physician statement (APS) is likely the biggest delay for writing life insurance with pre-existing conditions.
- Clients just like the ease of business when they don’t have to go through a medical exam, especially when the premiums aren’t impacted.
What’s the solution?
Many times, it’s writing a life insurance policy that doesn’t require a full medical exam and there are two common solutions you can use to write life insurance and avoid a medical exam for your clients.
- Non-Med Life Insurance with Accelerated Underwriting
- Simplified Issue Life Insurance
In most cases, both solutions can be used without sacrificing coverage amounts.
Accelerated Underwriting (Non-Med) vs. Simplified Issue Life Insurance
These two options are very similar from a client’s perspective, but they are very different in the eyes of the actuaries and underwriters at the life insurance companies. Both provide a life insurance application experience to your client with out requiring a paramed exam.
Yes, this means no blood, no urine, no scheduled exams.
What is Accelerated Underwriting or Non-Med Life Insurance?
The outcome is potentially the same, but the review and application process is completely different.
Accelerated underwriting is still fully underwritten by an underwriter with the absence of a medical exam and includes a health questionnaire.
If a policy is marketed as non-med or accelerated underwriting, you can assume that the underwriters will still request an APS in the proper instances. This doesn’t impact the types of life insurance your clients can apply for, it impacts how they’re processed and priced by the insurance company.
FREE Non-Med Life Insurance Cheat Sheet
Also, accelerated underwriting is usually used for life insurance companies that are offering larger death benefits that require an in-depth risk assessment of the proposed insured.
What is Simplified Issue Life Insurance?
The underwriting process of simplified issue is different from accelerated underwriting or true non-med underwriting because it relies on current data available to life insurance companies to make an immediate reject or accept decision.
This type of underwriting is most commonly found in final expense policies and some companies that offer lower coverage amount term life insurance policies.
How does simplified issue life insurance premiums compare against fully underwritten life insurance?
In both instances the premiums are likely to be higher, however, there are a few companies that use the same rate tables as their fully underwritten counterparts, but just limit the maximum age and death benefit.
The biggest difference you may see if the cost of insurance, maximum death benefit, and issue ages. Those three elements are all taken into consideration among other elements when actuaries are building these products with non-med underwriting options.
You can safely assume the rates will be cheapest with fully underwritten and most expensive with simplified issue, leaving accelerated underwriting in the middle. However, some carriers may give you a pleasant surprise, using data efficiently is a great thing! 🙂
Either way, they all have a place when you are fact finding to get the best chance of approval for your client.
Non-med life insurance companies
There are a bunch of life insurance companies with non-med products, but I’ll give you my favorites that have worked well in my personal practice which focuses on life insurance for business owners:
- Lincoln
- SBLI
- Protective
- ANICO
- AIG PG
I’ve used others but these stick out as the most common we use based on different underwriting scenarios.
When to use non-medical underwriting
We have used most of these non-med underwriting solutions in standard term life arrangements for individuals and most commonly for business owners looking to fund their buy sell or key man agreements. For the larger cases we’ll typically do a more detailed assessment to ensure that non-med and accelerated underwriting is the best solution.
If you’re a financial advisor, you know how important your client’s time is. I promise you they will appreciate your ability to streamline the life insurance portion process of your planning.
My suggestion is always offer your clients the option to complete full underwriting if the death benefit is within the limits and their health conditions will qualify. This will do two things.
- Strengthen your client’s confidence you are the right advisor.
- Potentially speed up the time to place the policy, allowing them less time to be distracted with the process.
Other simplified issue life companies
- Global Atlantic
- North American
- Columbus Life
- Sagicor
- Prudential
- Pac Life
- Mutual of Omaha
- Transamerica
- Royal Neighbors
- Securian
- Woman’s Life
The key to knowing which company to use is by comparing their non-medical and simplified issue requirements.
How much life insurance can I write without medical exams?
The coverage amounts for non-medical life insurance is $5,000 to $1,500,000 as of the publish date of this article. But, it varies from carrier to carrier.
With the carriers we have worked with, you can write up to $1,500,000 of death benefit with no medical exam, which is very competitive with a traditional life insurance policy that requires an exam. The top end of the death benefit range is going to be reserved for extremely healthy individuals with strong family history of good health.
You’ll typically find most companies cap their non-med life insurance death benefits around $500,000, but with improvements in technology for underwriting we continue to see that number increase.
The latest LIMRA report stated that most individuals are under insured by roughly $250,000 which gives you plenty of life insurance options that do not require a medical exam and can be completely sold over the phone.
Non-Med Life and Simplified Issue Applications
Carriers have paper applications and most have e-applications that are easy to use, just like what you are used to.
The biggest difference you’ll notice between these types of policies and fully underwritten products is the lack of “part 2” of the application, which is the detailed health questionnaire that the examiner usually asks.
Due to not requiring medical exams, the traditional “part two” of the application is removed, saving you and your clients a decent amount of paperwork to process. In many cases the health questions in part 1 are a bit longer, but still shorter than the traditional application.
Can I write life insurance over the phone?
Of course you can.
With the use of E-applications, writing life insurance over the phone is extremely simple. My preference is using companies that have short form drop tickets which I’ll explain more below.
Do non-med life insurance companies require phone interviews?
Not always.
The carriers that utilize the drop ticket application methods are usually going to require interviews conducted by a member of the underwriting team. This is usually due to their products being non-med or accelerated underwriting.
These interviews usually take about 15-20 minutes and the outcome of that interview in many cases will result in issuing the policy on the same day. Due to the time the interview takes, it’s critically important that you set your client’s expectations for the call. Make sure they are prepared with the information the underwriter will need.
I have written a lot of life insurance and have never had a single complaint from a client regarding the interview, largely because I set their expectations on the front end.
What about pre-existing conditions?
If your clients have pre-existing conditions, you’ll need to check each carrier’s underwriting guidelines to determine if simplified issue or accelerated underwriting makes sense. In many cases it does, but double check to make sure.
If you assume they will pass underwriting without checking, you run the risk of having a denial on your client’s record which will reduce the chances of an approval in a fully underwritten scenario.
Here are some common health conditions that can still get approved for life insurance with no exam:
- Diabetes
- Hypertension
- High cholesterol
- Obesity
Also, don’t assume your clients can’t qualify. A simple check of the underwriting guidelines or a call directly to the underwriters can often give you the yes or no answer.
How does the application process work?
This is the best part of writing life insurance over the phone or face-to-face. The process is simple:
- Log in to your carrier portal or consolidated application software (i-pipeline, drop ticket, etc.)
- Complete a short application and send to your client for an e-signature. You’ll get notification throughout the entire process.
- The client completes a phone interview and receives a decision on the policy.
- Policy is issued and, in most cases, you can initiate e-delivery.
The last thing I suggest is always using a cover letter when submitting non-med or accelerated underwriting applications. If for some reason the application is flagged for a deeper underwriting review, an attached cover letter can often be the difference between approval vs. asking for an APS. Here is a quick write up on how to write a cover letter to your underwriter.
Writing life insurance without medical exams can truly be very simple.
