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| Practice Management... Ideas for the living Benefits Practitioner: By Terry Zavitz B.Mus.A. CFP RHU CLU REBC |
Living Benefits insurance, although an important part of a balanced financial plan, is wrought with underwriting and contractual complexities. A small detail omitted from the application can cause problems should there be a claim, especially in the first two policy years. Clients often do not understand the reasons for the lengthy and intense underwriting procedures and agents can get confused about the various contractual details, especially with older policies. Below is a list of procedures that can be followed to ease some of these problems and protect you and your client in the event of a claim. * Send a copy of the completed and signed application back to the client requesting that he or she review the answers and call with any corrections or deletions. You will be amazed at the changes that come back to you. * Send a letter with the completed application emphasizing the importance of a correct application. Outline the medical and financial requirements and state that it may take six to eight weeks to complete the underwriting process. Once a client knows and understands the underwriting procedures and the length of time it takes, he or she is not as likely to get concerned when the policy takes time to be approved. * When taking an application, let the client know of any potential exclusions he or she may get as a result of his or her medical history. If the client understands that Living Benefit contracts are more difficult to qualify for on a standard basis and why, his or her expectations become more realistic, especially when there is previous medical history. * Have the client sign an authorization allowing you to get the financial information you need to underwrite the application directly from the accountant. You are then assured that you will get the correct documentation and the client is not bothered or concerned if additional documentation is required during the underwriting process. * If the Living Benefit policy has been issued with the requirement that part or all of an existing contract be canceled, handle the cancellation by writing the letter, have the client sign it and send it to the insurance company yourself. Not only is this good customer service, but it protects the client from a possible policy recession should there be a claim and it is discovered that the coverage had not been cancelled. * On every placing have the client sign a form outlining any changes to health or questions to the application Since the date of the application, even if a deposit cheque was taken. The interim insurance agreement normally does not become effective until the medicals are completed. Any change in health between these times is material to the underwriting of the contract. Most clients do not understand the importance of disclosing this information unless asked. Should there be a change, it is best to work with the insurance company in getting the best policy issued at this time, rather than at time of claim. * Attach a notice to each insurance document mailed to the client outlining the importance of correct and full completion of the document. Clients are often unaware of the importance of many of these documents and attaching this notice will cause them to take more time and care when filling them out. * Keep a copy of all contracts and riders sold with different carriers in a binder for easy reference. It will help you when a client calls wanting an explanation of his or her coverage, or when there is a claim. * Claims need to be handled with care. It is often an emotional time for the client and one of anticipation as to how the claim will be paid. Although each claim is different, the sooner the client starts to develop a relationship with the claims examiner, the better. Send a letter with the claim form stating that the form should be completed in its entirety and sent to the insurance company within 90 days of the disability. Include the phone number and address of the claims department and the name of the examiner if known. Many insurance companies do not keep the broker informed as to what is going on with a claim, It is important to let the client know this and to call you If there IS a problem or a concern. Should a problem arise, check out all the facts before acting. Living Benefits planning is vital to a well-balanced total financial plan. The underwriting and administration associated with Living Benefits is complex and time consuming. Establishing procedures in the office that protect you and the client as well as simplifies the detailed requirements associated with these contracts, is paramount. |
| Article originally published in CALU INFOexchange 2002, Vol. 4. and was reprinted by permission of the author Terry Zavitz B.Mus.A. CFP RHU CLU REBC, Terry Zavitz Insurance Inc. (519)667-0116. terry@zavitzinsurance.com |
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