What Health Underwriters Need to Know about Life Underwriting

1. What Health Underwriters Need to Know aboutLife Underwriting Hank George, FALU, CLU, FLMI Life Underwriter for 36 years www.insureintell.com hankgeorge@aol.com 414.432.0967

2. “Perhaps the most politically compelling incremental reform would bar health status underwriting (i.e., excluding or charging high rates to unhealthy applicants”-Lawrence O. Gostin JD and Elenora E. Connors, JD, MPJournal of the AMA303 (2010):1188

3. January 1, 2014OPPORTUNITYorARMAGEDDON?

4. Between now and then, health carriers will write as much business as possible……and some will offer DI, CI and LTC products which require intensive underwriting.Nevertheless,on 1/1/14, it seems likely that most health underwriters will have 3 viable options…

5. Find a new position in the company • Become a life, DI, CI or LTC underwriter • Leave the industry This presentation is dedicated to the second option

6. Health underwriters enjoy theunprecedentedadvantage of > 1,350 daysto prepare themselves!

7. OTHER UNDERWRITING OPPORTUNITIES • DI– most like health; limited job market • LTC –focus on selected impairments; growing job market likely • CI –a sluggish market; future prospects should be bright; medically-intensive underwriting • Life Settlements –growing market; focus on life expectancy; highly technical; most different from health

8. How is Life Underwriting different than Health Underwriting? • Focus on death only • Impairments like osteoarthritis, IBS, most pregnancy issues…are largely innocuous • Includes aviation, avocation, occupation and other “lay underwriting” concerns • Financial aspect will be the greatest challenge for health underwriters; implications vary by product, market

9. On the Life side… • Group and individual products • Group is corporate or association; typically combination of guaranteed issue, simplified underwriting and full underwriting as amounts of coverage increase • Individual may be fully underwritten or simplified issue;“super-simplified” is growing fast to serve so-called “middle market” • Main products: term (no cash value; pure protection) and permanent (cash value)

10. Face amounts as high as $50,000,000; but the average is $250K to 350K • Insured ages range from 0 to 85+; 18% now offer coverage over age 85! • Older age (65+) is fastest growing market • Stock, mutual and fraternal insurers • Over 150 significant domestic carriers • Largest concentrations of larger carriers Midwest and Northeast; not much left West of the Rockies

11. Life Distribution and Producers • Career agent • Independent agent • P+C-based agent • Broker • Debit and final expense agents • Alternative distribution: bank,direct mail,Internet,telephone,worksite etc.

12. Reinsurance plays a HUGE role • Insurers havetreaties(agreements) with 1 or more reinsurers andcede that portion of the risk not fully retained • Reinsurers mayretrocedepart of risk to retrocessionaires (reinsurers who insure reinsurers) • Automatic(accepted as is by reinsurer; underwriting by insurer only);facultative (reinsurer underwrites and makes offer) • Reinsurers are highly influential in terms of direct carriers’ underwriting practices

13. FullLife Underwriting isREQUIREMENT INTENSIVE

14. MIB is essentially universal • Non-medical, paramedical, MD exam • 70%+ use teleunderwriting • APS – age/amount and elective • Blood, urine and oral fluid profile • Motor vehicle report (MVR) • Inspection report/PHI • Financial records, court records, data from other electronically-accessed sources • Rx profiles • PSA screening • ECG • Abominations:Exercise ECG, Chest X-ray • Reflexive tests include CDT, HbA1-c, NT-proBNP, HCV, HBV and microalbumin

15. 90%+ use 1 or more reinsurer manuals • 70% of teleinterviews outsourced; home office underwriters rarely do teleinterviews • Average pending time: 22 days • Engines (straight-through processing) finallygaining traction • Much more producer contact in most life underwriting domains • Telecommuting/remote underwriting increasing exponentially • Contract underwriting growing • Outsourced underwriting not big (yet)

16. Life Underwriter Compensation • Varies WIDELY by company, market, geography • Chief underwriter:$100-250K+ • Senior underwriter:$50-125K • Trainee underwriter:$35-60K Source: 2009 Underwriting Management Survey

17. International Life Underwriting is growing by LEAPS AND BOUNDS! • China,India,Southeast Asia • Latin America • Eastern Europe,Middle East • Fluency in a second language is a HUGE asset

18. What would I do if I were a health underwriter who wanted to get into LIFE,DI,CI or LTCUNDERWRITING with a 1350-dayhead start?

19. LEARN&NETWORK

20. LEARN • LOMA Introductory Underwriting Course – www.loma.org • On the Risk-ualert@yahoo.com • Hot Notes - esther@hankgeorgeinc.com • JournalScan- all HUSG members • Underwriter e-Alert -ualert@yahoo.com • Underwriting: What Every Producer Must Know - www.hgipress.com • Take full advantage of www.insureintell.com

21. ALU PROGRAM • AALU, FALU designations • Certain LOMA courses + 3 ALU courses • Textbooks inexpensive and excellent learning resource • Nearly 50% of life companies prioritize for hiring FALUs!

22. NETWORK • Join the AHOU– get the annual Proceedings, all surveys, On the Risk included – inexpensive - www.ahou.org • 2011 –Las Vegas • 2012 –Orlando • 2013 –Phoenix It is well worth belonging even if you do not attend the annual conference!

23. Regionals – Midwest (Milwaukee, 9/10), New England (Worcester, 10/10), Southeastern (SEHOUA) and Western (WHOLUA) • State/Local – most successful include: Twin Cities, Chicago, Wisconsin, NY City (MUD Group), Hartford/Springfield, Michigan, Central Illinois, Texas…and CUF –which we just launched in Charlotte! • Contact me - or - visit AHOU.org for more information • These events are your #1 chance to network! • It’s axiomatic:the more people you know, the better your odds for success!

24. Can a Health Underwriter become a Life Underwriter? Absolutely! A friend of mine who spent 25 years in health underwriting made the transition and is now a telecommuting life underwriter for one of the best companies on the life side!

25. “Ya snooze, ya lose!”At best, 20-25% of health underwriterswill find positions in life underwriting

26. We can organize inexpensive learning experiences teaching life underwriting to health underwriters…anywhere we have a group who are proactive in preparing for career change!

27. At the end of the day, we are all brothers and sisters, bound by a uncommon giftIt is a true test of our character whether or not we help one another in these difficult times