Life Insurance Application Process: Avoid Declines and Wasted Time

You invest a lot of time in moving life insurance prospects from the "interested" phase to the application phase.

When policy applications are declined, you lose money – and possibly a client. But there’s a way to get around the life insurance application process ending with a decline.

This advice will also help you avoid wasting your time and ensure more money goes in your pocket.

3 Outcomes of the Life Insurance Application Process

There are three things that can happen with your next life insurance application.

1. The policy will be issued in the same manner for which it was applied. In this scenario, you’ll have a happy customer and get paid for your effort.
2. The application will be issued with a rating (other than what was applied for). You’ll have a less-happy customer and you might get paid.
3. The application will be declined. You’ll have an unhappy customer and you will not get paid.

Which Result Is Out of Your Control?

With the first two scenarios, you have at least some control. You have no control over the last one.

• A case that is issued as applied for can simply be delivered.
• A case that is issued other than applied for can possibly be re-sold to the client.
• A decline takes the case out of your hands completely and the carrier determines the destiny for both you and your client. This results in wasted time for both you and your client and results in zero compensation to you.

Obviously, there are certain situations that are just going to result in a decline.

There are other cases, however, that don’t have to end up declined, if you follow specific yet simple steps.

Here’s what you can do to increase the chances that the life insurance application process won't end up being declined.

1. Ask About Your Client’s Medical History

Today, most applications do not require the client to answer medical questions at the time the application is taken. That step is performed during the medical exam.

However, this doesn’t mean you shouldn’t ask in-depth questions about your client’s medical history. It can even help to have the carrier’s medical questionnaire on hand and cover each question with your client.

If there are any red flags that pop up, you have the choice of continuing with the application or cutting the process short to save everyone wasted time and effort

2. Get Expert Advice From Your Trusted Life Insurance General Agent

Before you submit the life insurance application, call your General Agent and ask if the discovered items are deal breakers.

For example, if a client had breast cancer two months ago, not enough recovery time will have passed to assure the underwriter that the client is out of the woods. A good General Agent will be able to answer quickly, or if the medical history is more complex, get their underwriter involved for another opinion.

Know when to fold. Be prepared to cut your losses if you find questionable issues that will lead to a decline. Some conditions, whether medical or financial, are clear-cut cases that carriers won’t approve.

3. Use a General Agent That Has an Experienced Underwriter

It’s imperative to access the best possible expertise in determining the risk before the case goes to the carrier and discussing any potential issues with the carrier as the case is being underwritten.

The difference between the General Agent arguing with the carrier about a decline and an experienced underwriter debating the merits of a case with the carrier is often the difference between a decline and an “offer.”

4. Submit a Cover Letter With the Application

We can’t stress this enough.

The fact is, you should submit a cover letter that carefully outlines the reason for the coverage and discusses anything that’s slightly out of the ordinary – with every application. 

If any red flags come up during the client interview, cover those issues in the letter. This is your opportunity to not only inform the carrier of such issues, but to explain why those issues might legitimately exist. It will also help the general agent’s underwriter and new business staff better understand what they’ll need to know to fight for the case.

Understand the Life Insurance Application Process and Avoid Declines

Declines are always going to be a part of the business.

You can, however, increase the likelihood of an approval, avoid wasting your time (and your client’s) by asking about your client’s medical history and financial situation, knowing when to fold, using a life insurance General Agent, and submitting a cover letter.

Following these steps will help you to avoid declines and keep you from wasting your time. 

After all, you should get paid for your efforts!

Updated 8/2021