With the Summer Olympics underway, it seems as if we're hearing more about the reasons athletes are not going to Rio than the accomplishments of those that are there. If you read the news in any capacity, you're no stranger to the Zika virus or the abundance of other issues coming out of Olympic Village. Since we've heard a lot about viruses, environmental concerns, safety concerns and overall instability in Brazil, we thought we'd take this opportunity to look into each of these situations as they pertain to underwriting for life insurance cases. Check out what we've found below.
So let's pretend one of these athletes came to you asking for a life insurance policy after returning home from Rio, with their new endorsements and gold medals in tow. Along with the concerns listed above, you'll take into consideration the fact that they probably travel fairly frequently and most likely spend more time in foreign countries than the average client. So, is all of this taken into consideration when it comes to underwriting?
4 Factors for Underwriting Frequent Travelers
- Healthy Client- First things first, let's start with the good news. Your athletic client is healthy! They are probably the healthiest client you've seen lately. They seek regular medical care, take great care of themselves, exercise daily and eat a healthy diet! Unfortunately, the points in their favor end here.
Read More: Risk Differentiation Underwriting: Video Case Study
- Foreign Travel- If your client is frequently flying to foreign countries, their risk could be higher in the eyes of the underwriter. Life insurance companies assign codes to countries based on the safety of travel to that country. These classifications are based on things such as war, disease, instability or economic issues. If your client is taking quick trips, under 8 weeks, they will fall into one coding system, however, if their stay is longer they enter an entirely different coding system. As you can probably guess, countries in which the United States has issued travel advisories are at risk for being declined. It is important that you and your client look at these countries before selecting a carrier. Many carriers treat countries differently based on their risk tolerance and profile. If you have questions on which carriers look at a specific country in a more favorable light, contact BSMG. Travel for political or government related purposes or high-risk occupations, such as foreign journalists, diamond/jewelry merchants, arms dealers etc., are also considered high risk due to the hazards associated.
- Activity Choices- While most athletes are partaking in events that are not considered to be exceptionally risky, some may be venturing out on their personal time. They may be in the best shape of their lives, however, if they are constantly trying new activities to stay at the top of their game, they may be putting themselves at risk. This also goes for the activities that your client chooses to partake in while traveling or at home. If they decide to go sky diving or swimming with sharks, they are going to be seen as a thrill seeker and looked at as posing a higher risk for the insurance company.
Missionary Travel- To add another layer of complexity, let's consider that maybe your world athlete decided to stay in Rio after the games for Missionary work. Missionary work is often looked at unfavorably by home office underwriters and insurance companies. This is because missionaries generally travel to areas that are impoverished and lack sanitary and current medical facilities. In addition to missionaries, Peace Corps personnel and medical volunteers are also considered high risk because they are likely to be exposed to hazards.
“ The key component to underwriting assessment success lies in the amplification of data being submitted with the application. All too often, the cursory questionnaires, utilized to obtain information akin to the risks outlined above are limited in scope and absent of the individual nuances specific to your client’s travel plans. It is critical for the advisor to obtain a thorough picture of the client’s foreign travel particulars. Be sure to include a detailed cover letter offering the Home Office Underwriter an amplified picture of:
- The cities being visited.
- Time spent in each city.
- Accommodations while in each location (Better to be at the Hilton versus the local Hostel).
- Secure transportation services for travel in each country.
- Professional guides for unique activities.
When the opportunity presents itself to differentiate your client from “the law of large numbers”, it behooves the advisor to work diligently to do so. Adding poignant subjectivity into an otherwise objective appraisal process can often times expand a Home Office Underwriter’s comfort zone and thereafter deliver you and your customer favorable pricing results.” - Timothy Moynihan Sr. VP Director of Risk Appraisal
Make sure your clients know ahead of time that the risk they put themselves in directly affects how they will be underwritten. If what they are doing in their everyday lives seems like a risk to themselves then the insurance company will see it the same way.