All this week I'll be appearing on The Business Insurance Zone with Steve Savant. Steve and I will be discussing competition aspects of the industry, including the foolish things agents, IMO's, and carriers do to pretty-up their product illustrations at the detriment of clients. This is a topic the Insurance Pro Blog has focused on in the past.
There are a lot of agents who try to play the term life insurance quoting game, and a lot of them do a rather bad job. It's one thing to to use a quoting engine to compare several companies rates in an attempt to bring the best price to your client. However, if you completely ignore the likelihood of a the best possible underwriting decision and simply quote the company that come out best when you blanket quote super preferred, your helping build animosity towards the industry.
If you want to be innovative and at the head of the class, you need to take a companies underwriting practices into consideration. For example, if you're client has an issue with cholesterol, there are some carriers that will penalize this fact much more drastically than others.
Also, there are some carriers that look amazing at preferred and preferred plus, but they rarely issue policies at these two risk classes. They may gravitate to standard or standard plus and may be a great contender with clients for whom you are attempting to avoid a rating, but they aren't a best bet for the super or marginally healthy.
The Guaranteed Universal Life market has fallen into a term spread sheet trap. The big problem is that a lot of agents and carriers are confusing guaranteed periods in an attempt to edge out their competition. Again, intelligence takes a back seat to the race to the bottom in showing prospect cheaper and cheaper premiums.
The problem is the money has to come from somewhere, and that somewhere is coming out of the probability that the policy will last as long as the client will. More and more carriers and agents are getting creative in the way they compare guaranteed universal life contracts. And the comparison is far from fair. Quoting software itself is mixing guaranteed to age 90, 105, 120, etc. all together and proving to be slightly annoying when it comes to accurately quoting premiums for a prospect.
Even worse is the mortality guessing game. In an attempt to shave premium dollars, some agents are taking to suggesting their clients take lower guaranteed periods on their guaranteed universal life policies. They use haphazard approaches to quickly assume when the client is likely to die (and their guessing as low as age 85).
On top of this, agents who are getting preferred or preferred plus offers from carriers seem oblivious to what this means vis-à-vis mortality. If a female client receives a preferred plus offer from a carrier on a to age 90 GUL, chances are really high she'll live past 90. This agent would be extremely prudent to return to the client and discuss the need for a longer guaranteed period. Regretfully, that conversation is not taking place.
We'll be back each day this week to highlight the next episode right here on the Insurance Pro Blog.
Brandon launched the Insurance Pro Blog in July of 2011 as a project to de-mystify the life insurance industry. Brandon was born in Northern New England, and he currently calls VT home. He attended Syracuse University and graduated with a triple major in Economics, Public Administration, and Political Science.