Digital Signatures Add New Meaning to Quick Issue Life Insurance!
By Karl Sorton
www.efinancial.net
Karl is the brokerage manager at Efinancial.net. He has been in the insurance industry for over 20 years. Karl has also worked at Eterm, and Insurance Only in addition to running his own successful brokerage.
Tax time just passed by again and more people than ever filed their return with a digital signature. Not one bit of ink is required to sign a US tax return in the digital age. All you have to do is type your name and click a box on a computer screen that declares that action completes a digital signature with just as much legal force as a traditional wet signature. A digital signature may have even more credibility since we can read EVERYONE’s digital signature! If its good enough for the IRS it should be good enough for life insurance companies!
Now some companies offer digital signatures on-line, which can help agents speed processing of life insurance applications. On-line applications eliminate the mountains of paper insurance carriers have been known for. Carriers that have gone digital don’t have to maintain hundreds of thousands of paper files, or scanning equipment to scan the information on that paper into computers. They don’t have to employ people to do data entry, the data is already there. If you stop for a moment and think about the tremendous money saved by not having to maintain the apparatus to move information on paper into the computer, and just start with the customer and agent entering data on the computer instead, you can see how carriers can save enough money to make competitive products available on an electronic platform.
Agents need to save money too. The problem is an agent can’t afford to drive across town to sell a $300 premium policy, put the person through underwriting, and wait weeks or months for the policy to be issued, if at all, even if the commission was 100%. With the new quick issue products the agent can sell the policy on the phone, quickly send the customer an email for their digital signature, let the carriers computer underwrite the customer in a matter of seconds, approve the application and allow the agent to tell the client they are approved, all in that one phone call!
You may wonder how insurance companies can issue such competitive policies in just minutes with electronic signatures when for years they’ve had to gather wet signatures so the company can order medical records from physicians, access the MIB, run credit reports, and potentially do inspection reports to verify information on the application. The answer is databases. Electronic databases allow this information to be accessed immediately, without the paper chase we have been accustomed to.
Underwriting can be simplified dramatically with electronic signatures. The MIB and credit bureaus accept digital signatures. Additionally insurance companies can now access some of the same pharmaceutical databases that pharmacies use when dispensing prescriptions. Some of the original intentions of the pharmaceutical databases were to prevent people from going from doctor to doctor for drug prescriptions, preventing addiction or resale of pharmaceutical drugs. The multiple scrips are discovered at the pharmacy level. It also helps prevent people from getting a prescription from one doctor and innocently getting another prescription from another doctor that is incompatible with the first prescription. Lives are being saved by these databases and they are used by insurance companies to speed the underwriting of life insurance.
Doctors are licensed in every state and a doctor’s name, address, and specialty can be verified by on-line quickly. For example a person who lists a specialist as their primary physician might warrant further investigation if the physician is an oncologist (cancer doctor) and the person said no to the cancer question on the application. The validity of the information on the application would definitely be brought into question if the pharmaceutical database shows a cancer drug was recently dispensed to this same applicant. On the other hand if a general physician is typed on the computer and the pharmaceutical database shows high blood pressure pills have been diagnosed for several years a policy might be able to be issued.
Databases can quickly be accessed through the digital medium that verify the validity of the home address listed on the application, whether the phone number listed on the application is in use and how long that phone line has existed. In many states the existence of a marriage certificate can be verified on-line. Criminal records are in the public domain and can be quickly verified on-line. MVR records in most states can be accessed instantly on-line. If the customer pays by credit card or bank draft there is more assuredness of the applicants identity.
Modern carriers use T1 point-to-point circuits to connect these various databases and underwrite the application in seconds while you wait. Customers who pass the basic screening get their policy immediately. Some customers will be routed out of the on-line system and have to answer further questions via an email or paper follow up system. For example most insurance agents know that an applicant cannot be declined or rated due to information in a applicants MIB file. Member companies must do further research if a positive MIB screen occurs. A carrier may ask the customer more questions if something on the application does not match the information they are seeing on the MIB, and then either approve, rate, or decline coverage. A carrier could even order medical records if they choose, however most carriers in the quick issue market do not because customers who are expecting an instant issue lose interest if weeks must go by for medical records to be ordered and received.
Most carriers currently limit their exposure on on-line quick issue products to $150,000-$250,000 of coverage. This market is currently underserved by agents who are all moving upscale in search of higher premiums and commission dollars. Digital signatures allow agents to profitably sell to the middle income market again.
Due to the complexity of setting up these systems some carriers are depending on Brokerage General Agencies or Financial Institutions to invest in the programming required for on-line insurance platforms. The carriers then act as provider of the product, letting the agent recruiting be done by the BGA’s, and the underwriting be done with preset guidelines and computer programs. Those BGA’s that invest in on-line platforms will benefit as more of the middle market gravitates to easy to acquire no-exam products from the tedius process of traditional underwriting.
The T1’s, digital hubs, and digital signatures continue working for the agent after the sale, allowing commissions to be deposited directly in the agent’s account immediately. A digitally signed direct deposit form does the trick. Now an agent can collect commissions within days instead of the weeks or months it can take for traditional underwriting. Commission annualization is now available with some quick issue carriers. Now an agent can make a sale on Monday over the phone, and have enough money deposited into his account Friday to pay for groceries. Instead of being a waste of time that small sale is now a good source of commission income!
Life Insurance companies accepting digital signatures is good news for agents, carriers, and most importantly, their customers.
www.efinancial.net
Karl is the brokerage manager at Efinancial.net. He has been in the insurance industry for over 20 years. Karl has also worked at Eterm, and Insurance Only in addition to running his own successful brokerage.
Tax time just passed by again and more people than ever filed their return with a digital signature. Not one bit of ink is required to sign a US tax return in the digital age. All you have to do is type your name and click a box on a computer screen that declares that action completes a digital signature with just as much legal force as a traditional wet signature. A digital signature may have even more credibility since we can read EVERYONE’s digital signature! If its good enough for the IRS it should be good enough for life insurance companies!
Now some companies offer digital signatures on-line, which can help agents speed processing of life insurance applications. On-line applications eliminate the mountains of paper insurance carriers have been known for. Carriers that have gone digital don’t have to maintain hundreds of thousands of paper files, or scanning equipment to scan the information on that paper into computers. They don’t have to employ people to do data entry, the data is already there. If you stop for a moment and think about the tremendous money saved by not having to maintain the apparatus to move information on paper into the computer, and just start with the customer and agent entering data on the computer instead, you can see how carriers can save enough money to make competitive products available on an electronic platform.
Agents need to save money too. The problem is an agent can’t afford to drive across town to sell a $300 premium policy, put the person through underwriting, and wait weeks or months for the policy to be issued, if at all, even if the commission was 100%. With the new quick issue products the agent can sell the policy on the phone, quickly send the customer an email for their digital signature, let the carriers computer underwrite the customer in a matter of seconds, approve the application and allow the agent to tell the client they are approved, all in that one phone call!
You may wonder how insurance companies can issue such competitive policies in just minutes with electronic signatures when for years they’ve had to gather wet signatures so the company can order medical records from physicians, access the MIB, run credit reports, and potentially do inspection reports to verify information on the application. The answer is databases. Electronic databases allow this information to be accessed immediately, without the paper chase we have been accustomed to.
Underwriting can be simplified dramatically with electronic signatures. The MIB and credit bureaus accept digital signatures. Additionally insurance companies can now access some of the same pharmaceutical databases that pharmacies use when dispensing prescriptions. Some of the original intentions of the pharmaceutical databases were to prevent people from going from doctor to doctor for drug prescriptions, preventing addiction or resale of pharmaceutical drugs. The multiple scrips are discovered at the pharmacy level. It also helps prevent people from getting a prescription from one doctor and innocently getting another prescription from another doctor that is incompatible with the first prescription. Lives are being saved by these databases and they are used by insurance companies to speed the underwriting of life insurance.
Doctors are licensed in every state and a doctor’s name, address, and specialty can be verified by on-line quickly. For example a person who lists a specialist as their primary physician might warrant further investigation if the physician is an oncologist (cancer doctor) and the person said no to the cancer question on the application. The validity of the information on the application would definitely be brought into question if the pharmaceutical database shows a cancer drug was recently dispensed to this same applicant. On the other hand if a general physician is typed on the computer and the pharmaceutical database shows high blood pressure pills have been diagnosed for several years a policy might be able to be issued.
Databases can quickly be accessed through the digital medium that verify the validity of the home address listed on the application, whether the phone number listed on the application is in use and how long that phone line has existed. In many states the existence of a marriage certificate can be verified on-line. Criminal records are in the public domain and can be quickly verified on-line. MVR records in most states can be accessed instantly on-line. If the customer pays by credit card or bank draft there is more assuredness of the applicants identity.
Modern carriers use T1 point-to-point circuits to connect these various databases and underwrite the application in seconds while you wait. Customers who pass the basic screening get their policy immediately. Some customers will be routed out of the on-line system and have to answer further questions via an email or paper follow up system. For example most insurance agents know that an applicant cannot be declined or rated due to information in a applicants MIB file. Member companies must do further research if a positive MIB screen occurs. A carrier may ask the customer more questions if something on the application does not match the information they are seeing on the MIB, and then either approve, rate, or decline coverage. A carrier could even order medical records if they choose, however most carriers in the quick issue market do not because customers who are expecting an instant issue lose interest if weeks must go by for medical records to be ordered and received.
Most carriers currently limit their exposure on on-line quick issue products to $150,000-$250,000 of coverage. This market is currently underserved by agents who are all moving upscale in search of higher premiums and commission dollars. Digital signatures allow agents to profitably sell to the middle income market again.
Due to the complexity of setting up these systems some carriers are depending on Brokerage General Agencies or Financial Institutions to invest in the programming required for on-line insurance platforms. The carriers then act as provider of the product, letting the agent recruiting be done by the BGA’s, and the underwriting be done with preset guidelines and computer programs. Those BGA’s that invest in on-line platforms will benefit as more of the middle market gravitates to easy to acquire no-exam products from the tedius process of traditional underwriting.
The T1’s, digital hubs, and digital signatures continue working for the agent after the sale, allowing commissions to be deposited directly in the agent’s account immediately. A digitally signed direct deposit form does the trick. Now an agent can collect commissions within days instead of the weeks or months it can take for traditional underwriting. Commission annualization is now available with some quick issue carriers. Now an agent can make a sale on Monday over the phone, and have enough money deposited into his account Friday to pay for groceries. Instead of being a waste of time that small sale is now a good source of commission income!
Life Insurance companies accepting digital signatures is good news for agents, carriers, and most importantly, their customers.
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