Life Insurance Underwriting Pocket Guide

18
The Company You Keep ® Life Insurance Underwriting Pocket Guide Agent use only

Transcript of Life Insurance Underwriting Pocket Guide

Page 1: Life Insurance Underwriting Pocket Guide

The Company You Keep®

Life InsuranceUnderwritingPocketGuide

Agent use only

Page 2: Life Insurance Underwriting Pocket Guide
Page 3: Life Insurance Underwriting Pocket Guide

Table of Contents

Page 1 IntroductionNew York Life’s Underwriting PhilosophyField Underwriter’s ResponsibilityUnderwriter’s Responsibility

Page 2 The Life Insurance ApplicationMedical Impairment Information

Page 3 Inspection Reports (IR)Telephone Interview Reports (TIR)TIR PreparationMotor Vehicle Reports (MVR)

Page 4 Routine Attending Physician Statements (APS)Cover Letters

Pages 5-6 Chart APages 7-8 Chart CPage 9 Risk Classification CriteriaPage 10 Senior Risk Classification CriteriaPage 11 Body Mass IndexPage 12 APS Expedite Form

Income Replacement GuidelinesPage 13 ReinsurancePage 14 New York Life Retention LimitsPage 15 Informal Inquiries

Page 4: Life Insurance Underwriting Pocket Guide

IntroductionThis guide has been developed to assist you with the applicationand underwriting process. The underwriting rules are subjectto change and therefore this guide will be refreshed as necessary.Please make sure you have the most up-to-date underwritingcharts and guidelines.

New York Life’s Underwriting PhilosophyNew York Life’s philosophy is to put good business on thebooks while providing professional and consistent underwritingservice in a timely and efficient manner. This philosophy willcontribute to New York Life’s long term growth, while at thesame time protecting its long term financial integrity and ourpolicyholders.

Field Underwriter’s ResponsibilityOne of the primary responsibilities of an agent is to be aneffective field underwriter. A chief responsibility of the fieldunderwriter is to gather and record accurate and thoroughinformation on the life application. The field underwriter isrequired to ask and record answers to each question on theapplication. The field underwriter is also responsible forproviding the company’s Privacy and Information Practicesbrochures to the client.

Underwriter’s ResponsibilityThe underwriter’s primary responsibility is to provide fair andconsistent underwriting decisions that protect the company’sfinancial integrity while accepting prudent risks that serve inthe best interest of our policyholders. The underwriter isresponsible for evaluating and categorizing each client’s riskbased on information gathered by the agent on the applicationand other sources.

1

Page 5: Life Insurance Underwriting Pocket Guide

The Life Insurance ApplicationThe application is a legal document that represents anagreement between the owner and New York Life InsuranceCompany. As such, there are rules that must be followed inorder to maintain the integrity of the contract.

• Ask each question as stated on the application and recordaccurate and thorough information. Incomplete informationslows down the process, resulting in delays for both you andyour client.

• White Out or highlighters cannot be used on an application.• Correct mistakes by drawing a SINGLE line through the error,

write the correct response next to it, and have the proposedinsured initial it.

• Prepare the application with deliberate “neatness” and“cleanliness.” For example, a misspelling of a client’s name dueto sloppy handwriting does not represent the agent or NewYork Life in a positive manner and can cause a delay.

• A complete application results in faster processing time. Theapplication should be proofread before being handed in to theGeneral Office (G.O.) staff. Missed questions could result inthe agent having to obtain additional information andsignatures from the client.

• Make sure all parties sign the application.• Obtain the correct state HIV Notice and Consent and

replacement forms.

Medical Impairment InformationIf a proposed insured has a known medical condition and youwould like a preliminary assessment from the underwriter,obtain the following information before contacting theunderwriter:• The specific diagnosis of the impairment;• Date of diagnosis or onset;• Treatment, including dates and specific medication prescribed;• Frequency and duration of episodes;• Date of most recent episode;• Type of tests completed along with date and results of each

test;• Date of the last visit to the treating physician, as well as any

medication or treatment provided.

2

Page 6: Life Insurance Underwriting Pocket Guide

Inspection Reports (IR)Inspection reports (face to face interviews) are obtained on totalrisk amounts of $15,000,001 and more. Clients should beprepared to complete a “face to face” interview with a consumerreporting company for New York Life.

Telephone Interview Reports (TIR)The Telephone Interview Report (TIR) program is an in-houseservice provided for total risk amounts of $500,000 to$15,000,000. The program allows us to minimize the degreewhich your clients are contacted by an outside vendor. Forselect agents a telephone interview report will be obtained ontotal risk amounts of $1,000,001 - $15,000,000. For qualityassurance purposes, TIRs may also be conducted on casesbelow $500,000. On certain face amounts, references or outsidesources are needed.

TIR PreparationThese are some very important tips to foster smooth processingof the TIR:• Provide the correct phone number and best time to call your

client; • Inform your client that they will receive a call from a New

York Life representative who will ask a range of questions(such as employment, financial, medical history, etc.) that willbe similar to questions answered on the application;

• Advise them that responses are confidential and used only forunderwriting purposes;

• Indicate which language and / or dialect the proposed insuredspeaks on the application to ensure that an interpreter is onthe line if needed.

Motor Vehicle Reports (MVR)A Motor Vehicle Report (MVR) will be obtained on all caseswith a total risk amount of $100,000 and more, at issue ages 16and over. This is for all plans except SPUL, SPVUL and EWL.

3

Page 7: Life Insurance Underwriting Pocket Guide

Cover LettersCover letters are especially helpful to an underwriter andshould be used whenever you feel there is information that mayneed clarification. This is your opportunity to provide greaterdetail to help the underwriter better understand the riskpresented by your prospective client or by any of the otherparties named on the application. Examples of details toinclude:

• How well you know the client;• How the sale developed, purpose of insurance and

determination of face amount;• Unusual or extensive medical histories or financial

situations;• Clarification of an unusual beneficiary or ownership

arrangement;• Discussions with the underwriter prior to the application

submission;• If there are other insurers involved or if the case is known

to be substandard;• Any information that may be unclear on the application.

Routine Attending Physician Statements (APS)An age and amount APS will be requested under the followingcircumstances:

4

Age at Application Amount0 - 6 months (Note 1) $100,000 and over7 months - 40 years old $1,000,000 and over41 - 45 years old $500,000 and over46 - 50 years old $250,000 and over51 - 65 years old $200,000 and over66 - 69 years old $50,000 and over70 years old and over All amounts

Note 1 APS is required at age 0 for all amounts if the child isborn premature (less than 37 weeks gestation)

Page 8: Life Insurance Underwriting Pocket Guide

$1 -49,999

50,000 -99,999

100,000

100,001-150,000

150,001-300,000

300,001-500,000

500,001-1,000,000

1,000,001-2,500,000

2,500,001and Over

Non Med@

Non Med,ExpandedBlood Draw,

Urine

Non Med,ExpandedBlood Draw,

Urine

Non Med,ExpandedBlood Draw,

Urine

Non Med

Non MedOral Fluid

#

Non MedOral Fluid

#

Non MedOral Fluid

#

Non Med Non Med

Paramed,Urine

(URI)*

ParamedBlood, Urine

+

ParamedBlood, Urine

+

ParamedBlood, Urine

+

Paramed& Urine

ParamedBlood, Urine

ECG

ParamedBlood, Urine

ECG

ParamedBlood, Urine

ECG

Amount Ages 0-17 18-30 31-35 36-40

Legend@ = APS required at age 0 if child is born prematurely.+ = ECG is also required if a cigarette smoker currently or within last 12 months.^ = X-ray Current cigarette smokers (or within the last 5 years) Individual or

Survivorship plans X-ray required at ages 46 and over at $2,000,001 and up.An X-ray should not be obtained on pregnant women.

# = Dried Blood Profile and Urinalysis should be done in the state of Vermont.* = Ages 12 and over only.Expanded Blood Draw = Blood profile and physical measurements.URI = Modified urine specimen

CHART C (Select Agents, Single Sum, Multi

7

Page 9: Life Insurance Underwriting Pocket Guide

8

Non Med

Non MedOral Fluid

#

Non MedOral Fluid

#

Non Med

Non MedParamed

Urine(URI)

MD ExamECGUrine

ParamedBlood, Urine

ECG ^**

ParamedBlood, Urine

+^

41-45 46-55 56-65 66-75 76 & Over

Non Med,ExpandedBlood Draw,

Urine

Non Med,ExpandedBlood Draw,

Urine

Non Med,ExpandedBlood Draw,

Urine

ParamedBloodUrine

MD ExamBloodUrineECG

MD ExamBloodUrineECG

MD ExamBloodUrineECG^**

MD ExamBloodUrineECG

^

ParamedBlood, Urine

+

ParamedBlood, Urine

+

ParamedBlood, Urine

+

ParamedBlood, Urine

ECG ^**ParamedBlood, Urine

ECG

** = Treadmill stress test Non-cigarette user (Individual plans) required at ages 46 - 75 at $10,000,001 and up.(Survivorship plans) treadmill required for non-cigarette users ages 46 - 75at $20,000,001 and up.Current cigarette smokers (or within the last 12 months) Individual orSurvivorship plans treadmill required at ages 46 - 75 at $3,000,001 and up.

When a treadmill is required at ages 46 - 75 on this chart, CHART A requirements must be used.A treadmill test should not be arranged until it has been determined that none hasbeen completed in the last 2 years and that there is no medical reason why the testshould not be done. Only treadmill exercise tests using the Bruce or similargenerally accepted protocol will be accepted. The test must be completed in ahospital or similar facility where emergency equipment and personnel trained inCPR are present.

-life Cases and Prior Insureds within 2 years)

Page 10: Life Insurance Underwriting Pocket Guide

Select PreferredRequirements

9

No nicotine use of any kind within

the last 5 years

See BMI Table

No nicotine use ofany kind within the

last 5 years(Nicotine OK for Select Std)

See BMI Table

Maximum of 250 Maximum of 250

All results withinnormal limits

All results withinnormal limits

No CardiovascularDisease parent /

sibling less than age60

No CardiovascularDisease parent /

sibling less than age60

Maximum of 130/80Maximum of 140/85

Maximum of 135/85Maximum of 150/90

No more than twomoving violations in the last 2 years.No DWI or DUI

in the last 5 years.

No more than twomoving violations in the last 2 years.No DWI or DUI

in the last 5 years.

No Yes

≤ 85 ≤ 85

Nicotine

Body MassIndex

Cholesterol

LabResults

FamilyHistory

Blood PressureAges 18-59Ages 60-69

MotorVehicleRecord

PrescriptionDrugs

CommercialPilots

RestingPulse

Preferred /Select Standard

Risk Classification CriteriaAges 18 through 69

Minimum Face Amount = $100,000

Maximum of 4.5 Maximum of 6.0HDL Ratio

Any combination of the following types of

prescription medications:

One statin cholesterol lowering medication

Hormone replacement(females)

Thyroid replacementOsteoporosis/Osteopenia

medicationsSleep Aids being used periodically as neededAllergy medicationsGERD medicationsNasal Steroid Spray allowed only if used

periodically for seasonal allergies

A single blood pressuremedication AND any combination of the following types of

prescriptionmedications:

One statin cholesterol lowering medication

Hormone replacement(females)

Thyroid replacementOsteoporosis/Osteopenia

medicationsSleep Aids being used periodically as neededAllergy medicationsGERD medicationsNasal Steroid Spray allowed only if used

periodically for seasonal allergies

Page 11: Life Insurance Underwriting Pocket Guide

Select PreferredRequirements

10

No nicotine use of any kind within

the last 5 years

See BMI Table

AttendingPhysicianStatement

Required within 3years

No nicotine use ofany kind within the

last 5 years(Nicotine OK for Select Std)

See BMI Table

Required within 3years

Minimum 140Maximum of 250

Minimum of 140Maximum of 300

Serum Albumin > 3.6

All results withinnormal limits

Serum Albumin > 3.6

All results withinnormal limits

Maximum of 145/85 Maximum of 155/90

No more than twomoving violations in the last 2 years.No DWI or DUI

in the last 5 years.

No more than twomoving violations in the last 2 years.No DWI or DUI

in the last 5 years.

No Yes

40 ≤ Pulse ≤ 100 40 ≤ Pulse ≤ 100

Nicotine

Body MassIndex

Cholesterol

LabResults

Blood Pressure

MotorVehicleRecord

PrescriptionDrugs

CommercialPilots

RestingPulse

Preferred /Select Standard

Senior Risk Classification CriteriaAges 70 and over

Minimum Face Amount = $100,000

Maximum of 4.5 Maximum of 6.0HDL Ratio

Any combination of thefollowing types of

prescription medications:

One statin cholesterol lowering medication

Hormone replacement(females)

Thyroid replacementOsteoporosis /Osteopenia

medicationsSleep Aids being used periodically as neededAllergy medicationsGERD medicationsNasal Steroid Spray allowed only if used

periodically for seasonal allergies

A single blood pressuremedication AND anycombination of thefollowing types of

prescriptionmedications:

One statin cholesterol lowering medication

Hormone replacement(females)

Thyroid replacementOsteoporosis /Osteopenia

medicationsSleep Aids being used periodically as neededAllergy medicationsGERD medicationsNasal Steroid Spray allowed only if used

periodically for seasonal allergies

Page 12: Life Insurance Underwriting Pocket Guide

Body Mass Index (BMI)BMI is a measurement of body fat based on height and weightthat applies to both adult men and women. It is another way tostate the height-weight relationship.

The following BMI ranges will be used to determine eligibilityfor Select Preferred and Preferred / Select Standard:

To calculate the BMI use the following formula and round to thenearest tenth (weight in pounds, height in inches):

BMI = [Weight/(Height x Height)] x 703

11

19.5 – 27.4

27.5 – 32.9Preferred /

Select Standard

Select Preferred

Ages 70 and over

19.5 – 27.4

18.5 –19.4Preferred /Select Standard

Select Preferred

Ages 18 through 69

27.5 – 30.9Preferred /Select Standard

Note: Final BMI measurement is automatically calculated in NB21.

Page 13: Life Insurance Underwriting Pocket Guide

APS Expedite Form (22313)In order to streamline the ordering of Attending PhysicianStatements, agents can use this optional form to potentiallyreduce APS turnaround time by several days. The intention isto identify the need for medical records early and get themordered before the exam Part II is received. This will expeditethe APS and can result in substantial time savings for you andyour client. The form should be submitted to the GeneralOffice along with the application and any other required forms.The form number is 22313.

Income Replacement GuidelinesIncome replacement is simply intended to replace the earningsof the insured, should he or she die prematurely. Generally,only earned income should be used in determining the amountof insurance needed. If unearned income stops upon the deathof the insured, then it too should be used in determining thereplacement income. If the unearned income, such as that frominvestments, continues upon the death of the insured, then itshould not be taken into consideration in determining theamount of insurance.

When evaluating a prospective client’s financial situation, theunderwriter considers many factors such as earned income,unearned income, net worth, occupation, age, and futureincome potential. The chart below is a guide for incomereplacement.

12

IncomeAge Replacement

Factors20-30 23-27x31-40 20-23x41-45 16-19x46-50 13-16x51-55 10-12x56-60 8-10x61-65 6-8x66+ 5x

Page 14: Life Insurance Underwriting Pocket Guide

ReinsuranceLife reinsurance involves the transfer of a specified riskbetween at least two companies. The companies enter anagreement (reinsurance treaty) whereby one comp-any (the reinsurer) for a negotiated price, agrees to indem-nify the other company (the ceding company) against allor part of a loss that the ceding company (e.g. New YorkLife) can incur in conjunction with its insurance con-tracts.

Automatic reinsurance is an agreement between NYLand the reinsurer whereby the act of risk transfer will bedone without the reinsurer “re-underwriting” the casebased on the agreements of the treaty.

Facultative reinsurance is an agreement by which theapplication papers must be forwarded to the reinsurer orreinsurers involved who will evaluate the case and eitheraccept the NYL underwriter’s assessment, offer a counterproposal or decline to cover the risk. Minimum faceamount for facultative consideration is $100,000.

New York Life sends cases that are offered at class 5 andhigher to facultative reinsurance (except SPUL, SPVUL,EWL, Asset Preserver, and Private Placement VUL). IfNew York Life makes an offer, we keep the offer on thetable and may win the case completely if we provided thebest offer.

13

Page 15: Life Insurance Underwriting Pocket Guide

New York Life Retention LimitsRetention limit is defined as the maximum amount of lifeinsurance, inforce and applied for, that NYL is able to retainwithout the need for reinsurance. Retention limits are set bythe Board of Directors.

Single Life Maximum

Issue Age Maximum Retention Limit

0 - 65 $25,000,000

66 - 75 $12,500,000

76 and Over $5,000,000

Joint Life Second-to-Die Maximum

Issue Age ofMaximum Retention Limit

Youngest Insured

0 - 65 $35,000,000

66 - 75 $17,500,000

76 and Over $7,500,000

The Joint Life Second-to-Die Maximum Retention Limits willbe reduced by the total amount of insurance coverage on thetwo insureds already issued by all New York Life companies.

14

0-60 $40,000,00061-65 $30,000,000

66-75 $20,000,000

76-85 $10,000,00086 and Over $7,500,000

0-60 $50,000,00061-65 $40,000,000

66-75 $30,000,000

76-85 $15,000,00086 and Over $10,000,000

Page 16: Life Insurance Underwriting Pocket Guide

Informal InquiriesAn informal inquiry is used to determine whether or not apolicy might be issued on a client, and at which possibleclassification, before an application is formally taken.

We utilize two types of informal inquiries, the pre-trust case andthe insurability case. The pre-trust situation is where a formalapplication is not used because the trust has not yet beenfinalized. Insurability cases are those where the intention is todetermine the likelihood of a client’s insurability based upon theinformation submitted.

The agent should fully complete the informal inquiry form(# 22078) and identify whether the inquiry is for insurability orpre-trust. This two-page form includes a special authorizationto allow the company to check the MIB and to obtain medicalrecords as needed. Important Note: Deposit premiums andtemporary coverage should never be accepted or providedon these cases.

For an insurability case, the underwriter will review the historyand advise the General Office to order specific medicalrequirements or Attending Physician Statements as needed fromthe medical providers indicated on the form to assess the risk.For a pre-trust case, the agent should order the appropriate ageand amount requirements. The underwriting department willorder any TIRs or MVRs as needed.

If an offer can be made, the underwriter will notify the officemanager and copy the agent with the offer, the plan, and theamount. If no offer can be made on a client, a letter will be sentto the office manager and the agent to inform them of thatdecision. A declination letter will not be sent to the clientand/or applicant.

15

Page 17: Life Insurance Underwriting Pocket Guide

NOTES

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

____________________________________

Page 18: Life Insurance Underwriting Pocket Guide

New York Life Insurance Company

New York Life Insurance and AnnuityCorporation (A Delaware Corporation)

51 Madison AvenueNew York, NY 10010

www.newyorklife.com

The Company You Keep®

For internal use only. Not to be used with the general public. 22

680

(05/

09)

SM

RU

003

2429

5 C

V (0

5/20

11)