The Importance of Cover Letters to Expedite Underwriting for Life Insurance Agents:
No one likes to do paperwork. The thought of writing a cover letter on a case is a lot to concur with. However, when collecting the relevant information and composing the client’s story to share with the carrier, an agent can save time and the case!
The purpose of the cover letter is to tell the story of the intended insured. If the situation is not explained, the underwriter will make certain assumptions about the individual, and the agent will inevitably end up trying to appeal an adverse decision. A cover letter helps the underwriter justify making an offer when they can see the whole picture. It gives them a picture of the entire puzzle; so, they know where the pieces go.
A well-written cover letter is essential for the underwriter to understand the context of the case. Often seasoned advisors fail to understand that when writing insurance, two sales always must be made:
- The first sale is the client buying the recommendation, where time and energy are spent.
- The second sale is selling the underwriter on the case, where many advisors fall short and lose the case.
The templet of the 8 components for writing a good letter:
- Who is the agent and why are they writing the letter?
- The agent’s relationship with the client (when one exists) Alternatively, the relationship with the advisor. Explain how the information shared with the underwriter was obtained.
- Identify and personalize the client. For example, Jim runs a successful company and provides widgets for all of Texas. He has 100 employees. He is the 100% stock owner of the Widget company; from Widget, Inc., he earns an annual salary of $250,000 with the usual end-of-year bonus of $50,000.
- Justify the insurance. For example, Jim has $500,000 of term, and the coverage is eight years old. Widget Inc. needs another $1.5 million on Jim. Further, elaborate that $750,000 will go to the business for debt and contract obligations in the event of death, and $750,000 would go to the family for income replacement.
- In-force insurance. Address this topic, especially on large cases as underwriters look at the entire line of coverage. This could cause the case to be underwritten facultatively instead of by the carrier itself. This is where an informal may be the best choice.
- Medical History and family history. This is where the story needs to be told. Example: Both parents are still living and in their mid 80’s. He exercises regularly and does not smoke or drink. Note that he has regular annual physicals and has regularly scheduled exams, not intermittent ones. If exams are intermittent, this could be a potential red flag. Explain vitamin use, etc. the client may take. This is the best opportunity to tell the story and obtain the desired offer.
- Medications. This is also a critical area, and most companies search the RX database, and medication usage will arise. So, if the client started using an anti-anxiety drug, tell the story. The client was bidding on a large Widget project and had geared up significantly, adding both staff and office space in anticipation. Now they have the contract there have been performance issues.
- Owner and beneficiaries. If there is anything different, then an explanation is appropriate. Example: The business owns the policy, but the beneficiaries are the business and the family. Tell them why it was designed that way, at the recommendation of the family attorney, Mr. Family Lawyer, Esquire, and supported by his CPA, Mr. Certified Public Accounted.
Cover these eight points every single time. Missing a step means additional weeks in underwriting and perhaps an offer that the advisor cannot place.
Help paint the picture for the underwriter reviewing the important cases. Do not have them put the puzzle together upside-down. Help the underwriter connect with the agent, and the insured, so they are not just another case number on their desk!
