DISABILITY
Disability Income Insurance Landmines by Larry Schneider
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ield underwriting for disability insurance applications has never been easy in terms of getting that hard-earned application through the home office’s processing cycle. Especially today, it is a much more difficult process to get a disability policy issued compared to other products. Many agents are abandoning their quest to get higher compensation from this untapped market. They are selling the same old products, due to their lack of knowledge, which causes too many declines because of unexpected exclusions and or ratings. First off, what is a landmine? A landmine is a health or other issue/condition/situation that, when submitted to an underwriter, will certainly cause any of the aforementioned results to occur. It might also occur if not recorded on the application and the attending-physician statement is the issue. Any of the above can explode in the agent’s face in that the results will be unexpectedly unfavorable and the applicant will not be a happy camper. Why is the applicant going to be unhappy? At the very least, they went to a lot of trouble completing the application, taking an exam, providing financials, and going through an interview, all possibly in vain. The agent will probably be blamed for not knowing to not submit the application or not providing the landmine information that led to the outcome. The agent may lose the applicant as a client and not get any referrals. What could the agent have done differently? Let’s look at what it takes to 40 | CALIFORNIA BROKER
get an application through the underwriting maze. The underwriter looks at the applicant’s tax returns, evaluates occupation/duties, references the MIB, the MVB, and acquires medical records. All of these affect the decision of whether to issue as applied for, issue with an exclusion and/or a rating, or decline. Now let’s look at what can be a landmine: • Health issues (physical or mental) • New business (less than a year) • Occupation • Working/traveling abroad • Age • Working from within the home • Income • Fraudulent statements In order to avoid embarrassment for yourself and inconvenience for your client, it’s important to recognize that going through normal channels for these dilemmas can be a waste of time for - CalBrokerMag.com -
all concerned and may have some negative consequences. Why submit a questionable application to someone other than a brokerage that specializes in cases that are hard to place? At the very least, get your client a benefit period of at least five years or longer without an exclusion, etc. What about simply waiting to see if the client’s medical condition goes away? Your client would have no coverage whatsoever, and waiting is not a guarantee that the condition will disappear. Even if it does, premiums will increase due to age. H Larry Schneider is a disability insurance specialist who has exclusively specialized in DI for over 40 years. He has published over 50 articles, is a claims consultant/expert witness, is a national resource for hard-to-place and standard applications (business and individual), and has written a two volume Disability insurance Encyclopedia. For more information, www.di-resource-center.com, email info@ di-resource-center.com, or call 800-551-6211 or 703-615- 4747 JUNE 2016