Underwriting: The Importance of Price

The underwriting offer made by a carrier has a huge impact on the overall price of a policy.

The Importance of Underwriting to the Final Price

1802 Insurance™ will submit your client's case to multiple carriers to help ensure that the client will receive the most competitive offer.

Once we receive the offers, we analyze and rank them to determine which one we believe most meets the client’s objectives.

Anatomy of a Large Case

Large amounts of life insurance often are looked at as a “bid” situation. Certainly, if I’m applying for millions of dollars of coverage, I should receive a volume discount – correct? While the rates “per thousand” do have breakpoints at higher face amounts, obtaining the most advantageous rating from an insurance carrier is the far more important factor. If not handled correctly, underwriting can be seriously affected.

Many factors go into the pricing of a life insurance policy. The underwriting class shown on the illustration plays a huge part in pricing of the policy.

More Art than Science

Underwriting is more of an art than a science. Carriers base their offers on mortality experience as well as a thorough understanding of the client's situation, and they make a judgment at the conclusion of the process. There is no single set of consistent data that applies for every carrier in each situation.

At 1802 Insurance™, our process includes preliminary “in-house” underwriting. We package and present your client's case in the manner that we believe will be the most advantageous. This includes highlighting facts that otherwise may go unnoticed, such as a detailed description of the client's exercise program or special dietary guidelines he or she follows.

Not only is there medical underwriting but also financial underwriting as well. Our packaging includes conversations with carriers' underwriters to help ensure they understand the reasons behind a request for a large amount of insurance.

Underwriting offers can vary widely from carrier to carrier even though they all receive the same medical information. Underwriting opinions often differ regarding what the mortality outcome will be. That difference may be small and is sometimes subjective. Our in-house underwriter has relationships with carriers’ underwriters and medical directors and has the ability to negotiate directly in an effort to ensure your client receives a competitive offer. This exclusive accessibility is a key component of our competitive advantage.

Multiple Carriers

1802 Insurance™ submits your clients’ medical records and other underwriting requirements (medical exams, blood test results, etc.) to multiple life insurance carriers. Several reasons are:

  • This practice allows us to achieve diversification of coverage among multiple insurance carriers
  • Large cases sometimes cannot be placed with a single carrier due to reinsurance limits
  • It offers leverage - multiple offers assist in negotiating the most favorable underwriting offer

Rating Classes

Fact:  All carriers do not price the same rating classes identically. In other words, a “standard” offer from one carrier can be markedly more expensive than one from another carrier. The same applies to any ratings.

It goes beyond just receiving a rating from a carrier – the rating must be applied to the illustration to review the overall effect.