The goal of every life insurance producer is to place more cases.
There are several avenues to accomplish this but there are even more ways you can derail your efforts – often without even understanding what you’re doing wrong. (But don’t worry – solutions are on the way!)
Let’s examine the most common errors that lead to the dreaded “other than as applied” underwriting result, as well as how to avoid them. By avoiding them, your clients will be satisfied, your life insurance business will grow, and you’ll consistently place more cases.
From field underwriting to working with a life insurance General Agency that adds true value to your business by helping you manage client expectations, let’s dive in, starting with four uncomfortable words.
“Other Than As Applied”
These are the words that no life insurance producer wants to hear.
And yet, it happens far too often even though it can be avoided in many cases.
There are two main reasons that you’ll get this unfortunate result and only one of them is your fault. (There can be a third reason having to do with financial justification, but that is beyond the scope of this blog.)
The first reason (that you can’t always foresee) is an unanticipated condition, such as a lab result from the prospect's paramed exam which might show an elevation such as cholesterol, A1C, liver function or some other red flag that your client doesn't even know about. That can and often does impact the ultimate underwriting rate class and carrier decision. “Other than as applied” is still not what you want, but at least you can’t be blamed.
But the other reason? It’s on you, my friend.
Chances are, you set your client – and yourself – up for disappointment by setting expectations too high.
In other words, you overquoted.
We’re going to take a closer look at what overquoting is, why this may be the wrong approach to reaching your ultimate goal – the satisfied client and placed case – and how you can avoid making this mistake in the future.
The Problem With Overquoting
Overquoting happens when you provide your life insurance prospect with quotes that show them in a potentially better rate class (ergo, lower premium) that what they ultimately qualify for.
Here’s an example:
John, a life insurance producer, had been talking with Mrs. Smith, who was interested in purchasing a $1 million term life insurance policy. She had a strict budget and didn’t want to spend more than $1200 per year on the premium.
John, anxious to sell the case, asked Mrs. Smith, “How’s your health?” When Mrs. Smith replied, “I’m in great health,” he quoted her the best rate class with a $1200/year premium. She was relieved that she could get coverage that fit into her budget and John was happy that he was on his way to making a sale.
You see, John didn’t ask the right questions, so Mrs. Smith didn’t tell, that she was using cannabis products for sleep. But when she was interviewed as part of the life carrier’s underwriting process, it was discovered.
John’s General Agency had to tell him that, while Mrs. Smith was eventually approved, she was approved in the Standard Plus rate class, which was other than as applied. Now she would be required to pay a $1600 per year premium due to the cannabis use.
This put John in a difficult position, as he then had to advise Mrs. Smith that her premium would be significantly higher than what was first illustrated. Obviously, Mrs. Smith was not too happy that she wouldn’t be getting what she was quoted.
Had John dug a little deeper at the beginning of the relationship, he could have saved himself a little embarrassment, better managed his client’s expectations, and increased his chances of placing the case.
Don’t worry. We’ll be returning to John.
Maybe his story is familiar to you. If so, you’re not alone. It’s a common occurrence for life insurance producers.
Why? There are a few reasons why you may be failing at managing your client’s expectations.
Why Life Insurance Producers Overquote
3 Reasons Life Insurance Producers Overquote Their Clients
- They're afraid of losing the sale to a producer who shows a lower quote.
- They want to look good by showing the prospect the lowest premium possible.
- They fail to perform thorough field underwriting.
Many life insurance producers are afraid of losing a sale to another insurance producer who might come in with a lower initial quote. It’s a mentality of “he who provides the lowest quote gets the sale.”
But that’s not necessarily true, especially if you communicate to the client the logic behind your method of quoting.
(Sidenote: We’ll talk about the issue of imposing your own beliefs on clients in a bit!)
2. The Need To “Look Good”
The irony is that the desire to look good in your initial meetings with your prospect can end up making you look worse later on. Showing the lowest rate can eventually backfire.
3. They Don’t Practice Good Field Underwriting
This may be the most significant factor leading to overquoting your prospects. Field underwriting is an art, and often overlooked or misunderstood.
Good life insurance field underwriting ensures that you’re doing all you can UP FRONT to quote your clients as accurately as possible.
Rushing through this process and failing to take the time to ask the right questions will too often result in an inaccurate quote.
Asking enough of the right questions is critical.
Here are just a few questions to ask:
- Do you have any past or current health issues that you’re aware of? For example, cancer, diabetes, heart disease.
- Do you use any tobacco products?
- Are you a cannabis user? If yes, what is the reason and how frequently do you use it?
- Do you take any prescription medications?
- When was the last time you saw a doctor?
- What is your height and weight?
- Is there any history of heart disease or cancer in any family member prior to their age 60? If so, are they still alive?
Asking these and other field underwriting questions may also spark additional conversations that will help you to provide an accurate quote.
Had John done thorough field underwriting and asked a series of key medical and financial questions of Mrs. Smith, he likely would have uncovered the cannabis use and had a much more favorable outcome.
The Uphill Resell Battle
Once you’ve received an updated quote based on an “other than as applied” approval, you have to do some damage control if you want to have any chance of still placing the case.
You’re almost back at square one and now have to resell the life insurance to your prospect.
Here’s how it looked for John and Mrs. Smith:
Mrs. Smith was upset but, much to John’s relief, she was eventually willing to talk about alternate life insurance options with him.
The original quote that John gave her through Carrier A showed a “Preferred Best” rate classification.
After a lot of time and effort, including checking with several other carriers, John’s General Agency found that with Carrier B, Mrs. Smith could save a couple hundred dollars a year with a $1400 per year premium.
That was better than the revised $1600 quote but still more than her budget allowed. Reluctantly, she was able to create a little wiggle room to accommodate the extra $200.
Except for the fact that John had to tell Mrs. Smith that she would have to submit another application AND it would take more time to complete.
Mrs. Smith decided she’d still move forward with the life insurance through John, but it was enough of a hassle and annoyance that she probably won’t be recommending him to her friends and family.
Again, John could have saved himself a lot of work, some embarrassment, and earned a loyal client who would have been a better source of referrals if he had made good field underwriting a priority.
You can have a different result than John if you follow the principles we’ll lay out in the next section.
How To Avoid The Overquoting Trap
Remember these two words the next time you’re ready to give a prospect a quote: Quote conservatively.
What if good old John had kept this in mind?
What if he had quoted Mrs. Smith in a Standard Plus rate class with a $1400 annual premium and explained to Mrs. Smith that it was possible the actual premium she would end up paying could be 10 or 15% less than how it was quoted?
John could have explained that the carrier would underwrite Mrs. Smith to the best level she could qualify for, regardless of how it was quoted.
A few things:
- Mrs. Smith would have already been expecting/planning for a slightly higher premium.
- If the quote came back at $1400, there would be no surprises. If it came back lower, John would have become a hero because who doesn’t like to pay LESS than they expected?
- John could place the case and get paid, and a very happy Mrs. Smith would probably tell her friends and family about how great it was to work with John.
Other than quoting conservatively, there’s another important factor that can help you stop overquoting your life insurance clients.
Work With The Right General Agency
3 Things Your Life Insurance General Agency Should Be Teaching You
- How to better manage your life insurance business
- How to practice good field underwriting
- How to keep from imposing your beliefs on your clients
Your life insurance General Agency should be providing the training and education you need to do your best for your clients AND to make good decisions for your own business, as well.
There are three areas in particular that your GA should be training you in (Hint: They should be familiar!):
1. How To Better Manage Your Business
When you choose to work with a General Agency, you should expect that they’re offering the right guidance and support for you to sell life insurance most efficiently and effectively while managing client expectations.
Of course, that includes each aspect of the prospecting and sales processes, AND providing insurance quotes.
2. How To Practice Good Life Insurance Field Underwriting
The importance of doing field underwriting well can’t be overstated. If you’re affiliated with a GA that hasn’t taught you how to master this critical skill, it’s time for you to find one that will. (Also, see the above section about how to practice good field underwriting.)
3. Don’t Impose Your Beliefs On Your Clients
We mentioned this briefly and now it’s time to dig a little deeper. To do so, we’re going to revisit our friend John and another situation he found himself in.
An older couple was interested in buying a large life insurance and they found John through a friend who he had helped previously. This time, John had learned from his mistakes with Mrs. Smith and he took the time to do thorough field underwriting. He was determined to NOT overquote.
But when he calculated the amount of the couple’s premium, he assumed that they would find the numbers way too high and would never agree to purchase the life insurance. In fact, during their meeting, John behaved as if the premium was really high.
Do you see the issue here? While John didn’t overquote these clients and he nailed the field underwriting part, he assumed he knew what their reactions would be.
Poor John. It’s time for another lesson.
What John didn’t know was that this couple had the means to buy the insurance. When John finally told them the proposed premium, they didn’t bat an eye and agreed to move forward.
Had John not been working with a General Agency who reminded him not to impose his beliefs onto his clients, he might have missed out on an important new client.
Make It Your Mission To Under-Promise And Over-Deliver
The moral of the story here is simple: underpromise and over-deliver and you'll be far more likely to be a hero to your clients, in more cases than not.
You can accomplish this by doing in-depth field underwriting, being careful not to overquote, and don’t assume you know what your client is thinking.
Maybe most importantly, partner with a General Agency that will give you support, including the training you need to avoid quoting mistakes that will cost you and your clients. Then maybe the next time you get an offer on a life insurance case, it will be “better than as applied!”