A financial advisory firm is offering a simple solution for clients looking to close the coverage gap between the time a life application is submitted and approved.
A financial advisory firm catering to the X and Y generations offers a simple solution when it comes to life insurance that could make a difference to clients.
“There is a period from the time you sign the application until the date the application actually gets approved,” wrote Ted Jenkin, co-CEO and founder of Oxygen Financial, a financial advisory firm focused on the X & Y generations, in Wednesday’s Wall Street Journal. “In between those dates, you’ll have to do a phone interview, request medical records and likely take a blood sample, EKG and other medical exams, depending on the amount of coverage you are applying for.”
Jenkin’s solution is to make sure the client attaches a cheque for the first month’s premium in order to provide coverage should something unfortunate happen to the prospective insured during the approval process. It’s known as “conditional receipt” and while Jenkin was talking about the U.S. insurance business, the same thing applies in Canada.
“That depends if the application is for new insurance when you didn’t have any before or not. If you send the payment with the application the coverage starts right away even before the underwriting is finished and before you’ve been approved,” says Manulife advisor Monica Weissmann. “So, if something happens during the three months or so that the process of underwriting takes, and you die, your beneficiaries will get the coverage. But if you didn’t pay and such a thing happens, you are not covered.”
So, almost 100 per cent of the time, advisors in both countries should be collecting some sort of payment with the initial application.
There is, however, an exception Weissmann explains.
“Unless you were applying for insurance that would be a replacement for insurance that you already had and was still active,” Weissmann reminds LHP. “In that case it would make sense to pay whenever the underwriting is approved when you replace one insurance with the other one.”
When there is no other coverage advisors should always ask for the first month’s premium – On this, Weissmann and Jenkin definitely agree.
