And then, one most likely has to "face the needle:" undergo a paramed exam including blood and urine samples.
But what if there was a way to avoid that last step?
The Principal Financial Group has introduced their "accelerated underwriting" process that could dramatically reduce both the intrusiveness and the timeline of the process. I recently had the opportunity to speak with Neal Halder, The Principal's assistant vice president and chief underwriter of individual life insurance, who filled me in on the finer points.
Let's start with the fact that it can often take a month (or longer) for a typical plan to make its way through underwriting. There's the application, of course, then (usually) an exam and maybe a Medical Information Bureau (MIB) report, and then the underwriter has to wait for all those results and inquiries to come in before a decision can be made. In the meantime, the applicant may or may not actually have coverage, and may in fact be having second thoughts about the whole ordeal.
That's where the "Principal Accelerated Underwriting" program comes into play. As Mr Halder explained, "our studies found almost 50 percent of eligible individuals tend to have a high number of favorable health factors so the need for lengthy exams and blood work are simply not necessary." He told me that the program was developed and is owned by Principal Financial Group.
Insurance agents are often loathe to cede control of a case to some other entity, and the "tele-app" process is a great example of that tension. Tele-apps are essentially telephone interviews between the home office and the applicant, and in Principal's accelerated underwriting program they’re used to help move things along. The process is actually pretty simple:
Once the agent and client have settled on a face amount and plan design, the agent consults a one-page checklist [ed: although this isn't a requirement, it's a pretty good idea] that helps cull out those that probably won't qualify. As long as the applicant is 18 to 60 years old and applying for one of their standard life insurance policies (including term, universal and variable life plans) of up to a $1 million of coverage, they might qualify for Principal Accelerated Underwriting. As an aside, a $1 million policy without a blood draw is almost unheard of these days.
Once the completed application hits the home office, Principal checks the MIB, motor vehicle reports and prescription records. At that point, the tele-app folks in Des Moines reach out to the applicant and ask a series of questions (part of the application). Those answers are then forwarded to the underwriter who, based on the MIB and other info and the answers to the tele-app questions, can approve the application with no further input (such as blood or urine) from the client.
It's also worth noting that the rates are the same regardless of the process; that is, one doesn't pay a higher premium by sidestepping the paramed exam.
All in all, a very interesting program. It's always great to find carriers thinking "outside the bun," looking for innovative ways to make it easier for people to buy the coverage they need.
Kudos to Principal, and Many Thanks to Neal Halder!
[Hat Tips to Erica J and Julia M]