FINANCIAL JUSTIFICATION

Welcome to our financial justification

class….

What is Financial Underwriting?• Financially qualifying

you for a life insurance policy using your income and financial situation.

Why Financial Underwriting is important? • Financial underwriting is

important in order to prevent “over Insurance”.

• “Over Insurance” is when face amount exceeds client’s financial needs.

Company

Ages

31-35 36-40 41-45 45-50 51-55 56-60 61-65

Over

to 30 65

American

25X 25X 25X 20X 20X 15X 10X 10X

5X

General Over 71-Individual

  Consideration

Banner

30X 30X 30X 25X 25X 20X 15X 15X

66-70=5X-10X

Life 71 & Up by

  Individual Consideration

Genworth and

30X 30X 30X 20X 20X 15X 15X 10X

66-69-10X

Genworth NY 70 & Up-5X

Liberty Life 20X 20X 20X 15X 15X 10X 10X 7X 3-4X

Protective

20X 20X 18X 16X 14X 12X 8X 8X 6XLife & Ann

Pruco

30X 25X 25X 20X 20X 15X 15X 10X

 Age 66-70  10X

Prudential* Age 71-80 5X

ReliaStar 30X 25X 25X 20X 20X 15X 15X 10X

 Age 66-70  10X

Age 71+ Individual Consideration

Transamerica

25X 25X 25X 20X 20X 15X 10X 10X

 Age 66-70  5X

TANYAge 71+ Individual

Consideration

US Life 25X 25X 25X 20X 20X 15X 10X 10X

5X

Over 71-Individual

Consideration

West

20X 20X 18X 16X 14X 12X 10X 8X 6XCoast

William

30X 30X 30X 25X 25X 20X 15X 15X

66-70-5X

Penn 71 & Up by

  Individual Consideration

Income Replacement• A client’s income is the most important factor looked at in

determining the amount of insurance that will be granted for income replacement.

•But what about applicants without income?

Applicants without Income

Most of our carriers will consider College students working on general undergraduate degree-$250,000Advanced Degree, medical school, law school-Up to $1,000,000.Recently unemployed in industry with good future employment potential-$250,000Disabled but insurable-Amount of disability times income factor

Non-Working Spouse

Most of our carriers will match the working spouse’s coverage to $1,000,000. Why?

Some other carriers like AIG will consider for more than $1,000,000 consider half the amount of working spouse, subject to max of $2,500,000. For amounts over $2,500,000 individual consideration, based usually on estate planning needs.

Business Insurance• Key person: Will

consider 5 to 10 times income depending on complexity of job.

• Buy/Sell: Market Value of applicants portion of business.

Bankruptcy

• Chapter 7-Must be discharged for at least 12 months w/o any new substantial amount of indebtedness.

• Chapters 11,12, and 13: Must be making regular debt payments as determined by court. Amount of income considered will be reduced by repayment amount.

• Multiple Filings-more than 2- decline

*****This applies for most of our carriers****

Insurable Interest• In order for a life insurance

purchase to be financially justified, the beneficiary must have an insurable interest in the policy. “What is the financial loss the beneficiary will sustain in the event of the insured’s untimely death?”……by Kim Diaz

Exercise

• John is applying with AIG for $1,000,000 Term 20. He currently is replacing a Term policy with Prudential for $150,000 and owns a MetLife Whole Life policy for $100,000. John is 43/yo and earns around $70,000/yearly. Question: 1. What is John’s total line of insurance? 2. How much insurance he currently have? 3. Does he qualify? If so, how much extra he can get?

Exercise 2

• Mrs. Samantha M Lovejoy is 34 years old and she’s applying for $500,000 with ING (homemaker). Spouse Mr. Chris L Lovejoy is applying for $1,000,000 with ING as well he is 35 years old and earns $120,000/yearly.

• ING posted an outstanding requirement on Samantha’s case “Financial Justification; Please submit financial justification as client is a homemaker and there is nothing listed in Other Income”

• QUESTION: Does she qualify for the full $500,000? If so, what is your response to the carrier??

Call is made after we confirm the total amount the PI can qualify for. Always check to make sure the carrier is correct and took everything into consideration.

(Check related cases if available.)

Keep In Mind• Discussions about life insurance in general are “touchy” subjects. • It’s important to establish a good relationship with your client’s at the

beginning and keep the relationship going all the way to the end.• Give them re-assurance that you are here for them, and we are

working to get them the best rate and coverage available.• Some client’s can be difficult, but just make sure you are doing

everything right and have asked for help when you need help.• Discussions about health, financial, and criminal history are all

sensitive subjects. However, this information is required to obtain an approval.

• Always keep the client happy- remember the client is always right even if they’re not. We just have to find a way to make it seem like they are right while we obtain the information.

• Another very important key to having a successful call is preparing!

Preparing for a Call• Gather all the information you need for the call. • Determine which information you are going to ask for first. (Always

ask the easiest stuff first, and the hardest or sensitive information last.)

• Think about the questions the client will ask you before giving you that information.

• Make sure you have the right answers to those questions before you make the call.

• If you have to ask a client for information and you don’t know why it’s needed don’t call the client. Including forms- if you don’t know what the forms are or what they are for, ask first and then contact the PI.

• If the client gets upset always re-assure them that you will stay on top of their case, and will push the case through as fast as possible.

Can you handle a financial call?

• Yes, now we have the knowledge, so lets apply that with our clients……

Thanks for coming…..!!