Are you considering buying a significant amount of life insurance? Do you own a jumbo life insurance policy and wondering about lower premiums and/or better terms?
High Net Worth consumers have a healthy understanding for the value of permanent life insurance. Wealthy life insurance buyers often refer to permanent life insurance as the Swiss Army Knife of planning tools because of its utility. When buying a large amount of life insurance, you should be aware of and have every advantage that was designed for jumbo life insurance buyers. Not all insurance companies specialize in this market. The ones that do have special, dedicated underwriting teams just for the jumbo life policies.
The underwriting class is a major factor in the pricing for:
- Jumbo term insurance.
- Jumbo whole life.
- Permanent life insurance.
Getting the best underwriting class should be the top priority of your agent who must be willing to fight for it on your behalf. Let’s hypothetically say there is a premium difference of 10% between a preferred and standard rate with a $2 Million term policy. That 10% difference may amount to only $150 per year because of the low face amount.
Take that same 10% difference in a $20,000,000 policy and the savings may be $25,000 per year, or more. The best rate class offered matters!
You need a skilled agent to get the best underwriting offer. Intangibles matter. Experienced agents are advocates for their clients, always acting as a fiduciary working in the best interest of their clients.
Undoubtedly, every agent wants a shot at a $50,000,000 policy but most are simply not experienced, skilled or comfortable in this market. You win when you’re working with a professional who knows how to navigate the landscape as your advocate. Contact me for a life insurance quote with competitive rates for large life insurance policies and see the difference.
Management of information is important:
Insurance companies share our underwriting information with other insurance companies. This is authorized when we sign an application. One way they do this is through the MIB (medical information bureau). The chances of future problems increases if the underwriting process is not managed properly. This is an area in which I am very cautious and take every step to limit any unnecessary information given to insurance carriers.
Tips for buying large life insurance or jumbo life policies:
- Clear up previous underwriting history. We will get an accurate picture of your 5 year health history to create a report of how much coverage is currently inforce and how much will be replaced, if any. The total amount of inforce coverage at the end of the process is also important to share with underwriters. This is known as the total line.
- Present the medical history. This helps us understand both current and past health issues which may impact underwriting. We recently helped a 66 year old woman acquire a jumbo policy for succession planning purposes. She had been on lithium for 15+ years without incident. Suddenly, she had developed a lithium tolerance that created some temporary issues. All her existing coverage was issued Preferred. Knowing the history helped the underwriters realize it was a tricky medication problem and nothing else, leading to a favorable rating for the new coverage.
- Product consideration. Underwriting classes are often different for permanent and term insurance. Some companies may be more competitive for permanent coverage. Selecting the right product is complicated. For example, commission amounts, high cash value riders, term blends and reinsurance issues should be considered as each may impact the process.
- Write a strong cover letter for the underwriters. This helps underwriters understand the case goals and objectives. It helps the underwriting team get to know you. Oftentimes, these jumbo life insurance purchases involve premium financing or corporate loan structures where the cover letter will be helpful.
Please contact me at 561-869-4500 or email me about a complementary consultation.
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