disability insurance underwriting

If you want more disability insurance approvals, you may have to steal them. We’re not encouraging you to take up a life of crime – this is more like stealing bases in baseball. If you want to steal a base, you need to understand how the sport works to time your moves correctly. If you want to steal disability insurance approvals, you need to understand how disability insurance underwriting works to prepare your submissions correctly.

Underwriting Can Make or Break a Sale

Imagine you find a prospect who’s interested in buying disability insurance coverage. You meet in person to deliver your sales presentation and leave a persuasive client handout behind. The meeting goes well, but you can’t be sure – sometimes people seem interested but never move forward. When you follow up this time, however, the prospect says she’s ready to buy coverage. You submit the application and think about how you’ll celebrate the sale.

Then you wait. It takes longer than expected.

Finally, the carrier gets back to you, but with bad news: the carrier is willing to insure your client, but not at the level your client wanted. It will also be more expensive than your client had expected. You try to put a positive spin on the situation, but your client is clearly disappointed. In the end, she decides not to buy coverage. It looks like you won’t be celebrating a sale after all.

If this happens once, it’s disappointing. If it happens repeatedly, it could cause serious damage to your insurance sales career.

What exactly is going wrong?

In many cases, the problem is the application doesn’t give the insurance underwriters what they want. Missing or incomplete information can draw out the underwriting process – and delays can lead to frustrated clients whose interest in the coverage you’re offering begins to wane. If the carrier response isn’t what you expected, you’ll also need to have uncomfortable conversations where you tell your clients why they’re facing higher premiums and more limited coverage.

Give Carriers What They Want

You want disability insurance underwriting to go smoothly. For that to happen, you need to give the underwriters what they want.

You probably think you’re already doing this. After all, you’re answering every question on the application. However, if your underwriting results keep deviating from your expectations, something’s going wrong.

Insurance agents often misunderstand what underwriters want. They think they’re answering all the questions adequately, but they’re actually missing some important things. This is especially likely to be the case for three key factors: current income, occupational class, and medical history.

Answering Income Questions

Questions about your client’s income may seem pretty straightforward. In fact, they often can be. However, some clients have more complicated income scenarios, which can impact underwriting results.

There are two key issues to be aware of:

  • Is the client traditionally employed or self-employed? Income questions are more complicated for self-employed workers, including for independent contractors and freelancers in a wide range of fields. For self-employed clients, focus on net annual earnings or business profit after deducting business expenses. This may be significantly less than gross income!
  • Does the client earn bonuses and commissions? For traditionally-employed clients, income can become more complicated if it includes commissions and bonuses on top of base pay. For these workers, see what the 1040 tax form for the previous year showed as the client’s annual income and focus on gross pay before deductions.

Answering Occupational Class Questions

A lot of agents go wrong when they reach occupational class questions – they simply enter the client’s job title and move on. Unfortunately, this is not what disability insurance underwriters want.

Underwriters don’t care about job titles; they care about job duties.

Occupation impacts underwriting because different jobs have different risks. Since your client’s occupational class will impact rates as well as coverage terms, the stakes are high. You need to provide enough information about your client’s actual duties to support accurate underwriting.

  • What kinds of things does the client do in a typical week?
  • How long has the client been doing this type of work? Has it been at least three years in a row?
  • What percentage of time does your client work in an office, from home, and in the field? How much time does your client spend in the car or traveling?
  • If the client supervises activities, how much time does the client spend supervising and how much time personally performing activities?
  • What is the client’s education and training? Does the client have certificates, licenses, and degrees?
  • What is the most hazardous part of the job and how often does your client perform this hazardous activity?

For certain occupational classes, you’ll also need to provide information about how much the client has earned each year for the last three years. For self-employed clients, you need to provide information about the business structure.

Answering Medical Questions

Medical questions can be sensitive, but they are absolutely vital to accurate and timely underwriting. Don’t just copy information from old medical exams in prior files and don’t assume there’s been no change in medical history. Instead, answer every question thoroughly – even if the client is also receiving a medical examination. In addition, make sure you include the name and contact information for the practitioner.

If clients are uncomfortable sharing medical information with you, they can provide the information directly to the carrier using the telephone application option. However, you’ll still need to be aware of medical issues that could impact underwriting to be able to focus on the carriers most likely to offer good terms.

Communication Is Critical

If you lead clients to believe their coverage will look one way but it ends up looking another way, clients may be upset. You can avoid unpleasant surprises by establishing realistic expectations.

Explain how factors could impact the terms. For example, you might tell clients that a policy will replace 60% of their income. If the terms from the carrier end up covering less than 60% of their income, your clients will be upset. You could have managed expectations better by explaining that 60% is a ballpark figure and the actual amount may be lower based on the income documentation. This also gives you an opportunity to add positives – like the fact that individual disability insurance benefits are generally exempt from income taxes.

Ask why the client is interested in coverage. Imagine you have a prospect who asks if the policy covers pregnancy; you say it does. She buys coverage. A couple of months later, she calls you, furious. Her carrier has denied her claim because she was already pregnant when she applied for coverage. You didn’t know that and, since you didn’t know, you didn’t warn her the coverage would exclude current pregnancies. Now she’s accusing you of misleading her.

All of this may seem like a lot of work, but it will help you avoid bigger problems and lost sales down the road. For more tips on how to steal underwriting approvals with such success it seems criminal, download our stealthy guide.


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