There is no worse feeling as an agent than when your client angrily believes they were purposely given a bad quote in order to lure them into a higher premium. They believe the system is designed to trick them into a “bait and switch” scheme. That could not be further from the truth when you work with a reputable insurance quoting agency or broker. Our goal is to find the best rate available for all applicants, depending on their unique health, lifestyle, and personal circumstances. What happens is that the basic insurance underwriting process may uncover some surprises that you as the applicant were not even aware of. A health issue that a doctor’s visit uncovered that you never dealt with. That is why understanding the process of insurance applications is so important. That knowledge and general understanding of the quoting process can help you avoid unnecessary anger, confusion and misunderstandings.
Free Quote vs. Personalized Quote
Let’s begin with step one: requesting an initial life insurance quote that requires very little information to obtain. In order to receive that Free Quote you simply need to provide your name, gender, date of birth, height and weight, the amount of coverage you are seeking to purchase and the term length. A Free Quote does not take into account any personal information. The quote is based on age, gender and the amount of insurance you selected. The Free Quote is a powerful tool that gives the client the opportunity to shop around for multiple quotes with no commitment. Clients are able to review many face amounts, insurance companies and price points before deciding what suits their needs prior to moving to next the step. That’s when you continue with the application process and speaking with an agent to receive a Personalized Quote.
A Personalized Quote gives the client a projection of the rate class they may qualify for pending full underwriting review. In order to receive a Personalized Quote, the proposed insured is asked to provide detailed information. This information includes but is not limited to, personal health history, family medical history, recent driver’s license history, hazardous hobbies, foreign travel and more. The applicant may not have access to all of the details at the time they are requesting a quote or they may not recall the full scope of the information they need but it moves the process forward. The Personalized Quote is a tool used to provide the client with a reference point to understand how their risk factors may impact underwriting. It is important to keep in mind that the quote is subject to change pending full underwriting review and should never be considered a formal offer for life insurance.
Quoting an inexact science
Have you ever attempted to describe a strange noise your car was making to your mechanic over the phone? The reply you most likely heard from your mechanic was “well, it could be Problem A, but also could be Problem B and if it is not either of those it is definitely Problem C. You should bring the car in for me take a look at it”. That is life insurance quoting in a nutshell. The personalized quotes provided are only as strong as the information given during the quoting process. The personalized quote cannot account for information that is uncovered during the underwriting process, to which the agent was not privy. There is no way to know what notes a Doctor may have written in your medical records, or what your exam results are until the underwriters have reviewed them. That is why the accuracy of the information you provide during the quoting process is critical to projecting you closer to your actual rate. If the information provided is a rough estimate with many details left out that does not mean you cannot be given a personalized quote, it simply means that there is more room for your actual rate class to vary after underwriting.
My Quote went up what are my options?
During underwriting much information regarding the proposed insured will be collected and reviewed over the course of several weeks. At the beginning of underwriting when some of the initial information reaches the underwriters, they will begin “tracking” an applicant for a certain risk category. Tracking usually represents the best-case scenario for the client based on the limited information the underwriters have already reviewed.
After the full underwriting review is completed, a formal offer will be extended to an approved applicant. The formal offer will be one of the three following scenarios. The applicant was “approved as applied”, meaning the rate applied for was offered and the client will pay the premium they were quoted. The second scenario is the applicant was “approved better than applied for”, this means the client’s approved rate class is better than the one they were quoted and the premiums will be lower for the insurance they applied for. The third possibility is the applicant “is a greater risk than applied for”, this means that information was uncovered during the underwriting process that differed from the personalized quote and the applicant will be asked to pay a higher premium than quoted.
When a client is considered a greater risk than applied for their initial reaction is usually shock and sometimes they might even be offended by the offer. If you have been asked to pay a higher premium it is it important to understand why the rate class changed (your agent will be able to explain what prompted the underwriter’s decision) and what your options are moving forward. Since each insurance company has their own underwriting guidelines depending on the reason that caused your rate change you might qualify for a better rate with another carrier.
At the conclusion of your initial underwriting, your agent can shop around for other insurance carriers that might look more favorably on your profile. If your profile is a better fit for another insurance company, you can apply with them and accept the best offer. In some cases you may not qualify for a better rate with another insurance company. Your existing rate class could be due to a temporary risk factor (slightly overweight, going from smoker to non-smoker, slightly uncontrolled medical condition, too many speeding tickets in the past 2 years, etc.) which can be corrected over time. Or you may have a permanent risk factor (family history of cancer or cardiovascular disease, etc.) which cannot be changed over time. In either case it is in your best interest to place the policy offered in force. If the cost of the insurance coverage is beyond your premium threshold you can always reduce the face amount or term length which will lower your premium to a more desirable amount.
Even though the underwriters take into account the rate class an applicant was quoted, it has little impact on the formal offer. The underwriters will perform their due diligence and offer you the best rate you qualify for according to their guidelines. The initial quote does however, have an impact on your expectations as an applicant. The importance of providing as much detail as possible to your agent during the quoting process cannot be understated. The information you provide will not guarantee you approval but it can assist in giving you and your agent a better understanding of your potential risk factors and how they might impact underwriting. In turn your agent will be able to seek out the insurance company who will possibly offer you the best rate. To start the process, request a free quote by visiting www.lifequote.com today!