Perhaps you are considering the purchase of a large life insurance policy? Or, maybe you own a jumbo life insurance policy and you are looking into the possibility of lower premiums and/or better terms?
High net worth consumers have a good understanding about the value of permanent life insurance. These life insurance buyers understand permanent life insurance as a Swiss army knife of planning tools because it does so much. When buying big amounts of life insurance, you should know all advantages that were designed to make these policies super competitive. First, not all insurance companies specialize in this market. The ones that do have specially priced premiums and dedicated underwriting teams just for the big case market.
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 for jumbo policies should be the top priority of the agent representing you. This means the agent is willing and experienced to fight with underwriters for the best possible rate. For example, assume 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 and low premiums for term insurance.
But take that same 10% difference in a $20,000,000 jumbo policy and the savings may be $25,000 per year, or more. The best rate class 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 their best interest. Undoubtedly, every agent wants a shot at a $50,000,000 policy but most are simply not experienced or knowledgeable in this market. Clients win by working with a professional who is your advocate. Contact me for a jumbo life insurance quote to see the difference.
Management of information is also important in jumbo cases:
Insurance companies share your underwriting information with other insurance companies, through the MIB (medical information bureau). The chances of future underwriting problems increases if your underwriting process is not managed properly.
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; cover letter. 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 offer 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 cover letters are helpful.
Please contact me at 561-869-4500 or email me about a complimentary consultation.
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