See how COLI policy reviews really work
Our team reviews in force policies daily, maybe even hourly. For some advisors, it creates a significant stream of new sales. It’s a non-threatening service that creates future opportunities. Reviews can easily add six-digit figures straight to an advisor’s bottom line. Stay tuned, we’ll show you how.
It’s no secret policy reviews are paramount to our industry; it ensures policies continually align with the ever changing needs of our clients. Folks, they’re overlooked too often. Why aren’t we doing more of them? We’re doing best by clients, but sometimes we overlook these audit opportunities. So, let’s walk through a policy review tale where we were able to take a request to add COLI plan participants that resulted in quadrupling the advisor’s revenue and saving his client to over $150k in annual premium. Read on and see how our team was instrumental in auditing the corporate owned life insurance (COLI) plan that created a better financial outcome for all.
About eight years ago an organization put a COLI plan in place. Since that time, the original advisor had retired, and no one was servicing the plan. The organization knew they needed to add several new individuals to the plan, but needed an advisor to add the new individuals to the plan. Our advisor had an “in” with one of the home office directors, which ultimately put him in place to snag the new client, handle the new additions, and manage the organization’s future plan.
Here’s where CreativeOne comes in. Our advisor called us about the opportunity and help him get the ball rolling. The first thing that needed to happen was lock in our advisor as the agent on record. Our sales team has a tenured relationship with the current policy carrier’s regional vice president. The request got expedited, without us asking. Once our advisor was officially added as the agent of record, the window to access a number of in force illustrations window opened. We could take a peek under the hood and dive into the in force policies, how they were sold and if they were meeting the needs of the organization.
Now, adding the new policies would have been straightforward, but due diligence and policy reviews needed to happen first. At first blush, our team noticed the COLI plan included some of the first Indexed Universal Life (IUL) products offered in the market. Even over the past decade, insurance product enhancements that have dynamically changed. Knowing this was an early IUL product offering, there could possibly be a more efficient option. After thorough research, our sales team found the policy wasn’t being funded efficiently, so our product intelligence team started scoping possible carriers who could be a better fit for the advisor’s client.
And there was a better strategy. But it came with challenges.
Knowing we have nearly thirty carriers we can work with, our team narrowed down to carriers who offered multi-life products with guaranteed issued underwriting. This significantly narrowed the field of play. We got a copy of the census and crafted a custom plan for our advisor to present to the client. It showcased their current plan and what a replacement plan could offer. In this instance, we were able to lower the costs while keeping the same (if not better) coverage for employees. The financials spoke for themselves: it was a savings of over $150k in premium. A substantial savings for any organization.
So Close, But Not
As with any case involving multiple lives, moving parts, and complexities, there were hurdles. Some were known early on and others so kindly presented themselves mid-way through the process! Unbeknownst to the advisor, a couple of phrases that surely came from our team during the process were, “four-alarm blazing fire,” “no one does that,” “go fish,” “we need an exception,” “thousands of pages.”
Since the COLI plan was existing, we needed a guaranteed-issue underwriting program to ensure all current participants could continue their plan. Essentially, we needed to continue coverage for all plan participants without medical exams, attending physician’s records, and preferably with an expedited application process. Without these components, it was a deal-breaker.
The Tango Begins
So, we confronted a carrier who offered guaranteed issue for employees under the age of 70. We needed them to cover two people who were 70+. Notoriously, COLI programs have rigorous underwriting with very black and white guidelines. Was it even fathomable that we could get an exception? Beyond that, this specific carrier has a renowned reputation for NEVER granting exceptions. However, without an exception, we couldn’t provide coverage for two plan participants, one being the 71-year-old president.
To our advantage, we had leverage, because the carrier didn’t know they weren’t in competition with other carriers for the case. And without it, they were missing an opportunity to sell 64 IUL cases, which was around $610k in target premium. Could they pass this up in the last few months of the year? Our CreativeOne team was on pins and needles waiting on the final word from the underwriter. In our favor, they came back with an exception to the age-based rule for the new plan participants. This was a huge feather in our cap, but also for the advisor. He was able to offer a plan to his client that wasn’t available to others!
Where’s the Beef? Canada???
As you could expect, the advisor was ecstatic about the proposal, but also the maximum age exception that would allow him to win the case. However, the waters got murky again. As our team was pulling in the individuals’ details from the census, we didn’t have all of the information on residency. The home office was located in the Midwest — so, no problem. What we learned with the plan participant’s details via an Excel file… was the plan participants were all over the U.S. Some had unusual zip codes… Canada. Digging into the files, there were eight plan participants that lived and worked in Canada. Not just one, but over 10 percent of the participants. Here’s the rub: the plan was for U.S. only and didn’t cover Canada. Road block. Could we get this infamous carrier’s chief underwriters to make a second exception? Could we get the re-insurers to approve the plan? We waited and waited some more. The one person who could make the call was unreachable and on vacation, so we waited. Ever heard the phrase, “Hurry up and wait?” Luckily the day their chief underwriter was back in the office, they made the call. It was a victorious green light for our advisor.
Now that the ball was back in our court, we could move forward at full-speed to ink the deal before year-end. There was a ton of paperwork, an entire paper box full of apps. It was an administrative nightmare, because there were 64 applications, each about 25 pages long. To add fuel to the fire, the advisor’s assistant went on maternity leave the week prior and the task of getting signatures from plan participants across the U.S. was daunting.
Thankfully, we got it approved, policies were issued and the case was placed before year-end… on December 30th. After the final check was cut and the policies were placed, here’s what our advisor had to say. “I’m not sure why I don’t just do three of these cases a year instead of what I’ve been doing.”
“It’s a win-win-win for the team! Luckily, our industry tenure and relationship paid off to give us some huge wins in the case,” said Pat McEvoy, Sr. VP Life Sales
Know a Guy?
After witnessing this case, we can’t say enough about policy reviews. They’re a complimentary service we provide that helps advisors create value. Give our team a call and let us help you audit in force policies. Even if you’re not confident to approach a large relationship, but could do so with assistance, we can help. We’ve hooked advisors up with carriers as well as industry veterans to win bigger sales opportunities.
Policy Reviews & Your Bottom Line
Wonder what a policy review can do to your bottom line? Here are the five most common findings from policy reviews. If you wrote just one case a month, here’s what it would do to your bottom line: