151

Chapter
13 The Application and
Underwriting Process

Happiness is nothing more than

good health and a bad memory.
— Albert Schweitzer (1875-1965)

I f you and your Objective Financial Advisor and the LTC Plan­ning
expert they recommend determine that LTC insurance is the
best planning option for you, the next step is to apply for coverage.
The following information ex­plains the pro­cess for applying for cov-
erage and what to expect in the underwriting process:
• Complete the application. The application includes personal
information such as your name, date of birth, height, and
weight. But more importantly, the application includes a series
of health-related questions. The answers to these questions
and the remainder of the process explained below will deter-
mine whether or not you will be issued coverage, and if so, the
exact premium rate you will pay.
The application and a refundable deposit (usually one month’s
premium) are submitted to the insurance company’s under-
writing department. The underwriting department reviews the
information on the application.
• Wait for the decision. The insurance company may simply issue
or decline the policy based on the information on the appli-
cation. Although it was common for underwriting to be this
simple in the past, the underwriting process today is generally
more complex and requires additional steps.
• Verification of information on your application. A common
step is a telephone conversation between a member of the com­­
pany’s underwriting department and the applicant to ver­ify the
information on the application. The second purpose of the call
is to confirm that the applicant understands the type of cover-
age and benefit amounts for which he or she has applied.
152 Chapter 13: The Application and Underwriting Process

• Complete a physical exam. The un­der­­writer may also request

a face-to-face physical. While it is becom­ing more routine
for companies to re­­quest physical
exams, most companies still limit
this request to applicants above a
Fast Facts:
certain age—usually 65. Physical n Physical exams are
commonly performed
exams may be randomly requested on applicants 65
for younger applicants. and older. The exam
During the physical exam, a memory is paid for by the
insurance company.
test for cognitive impairment will
also be performed. This is a simple n The underwriter may
request a written
test designed to assure that a person statement from your
is not already developing memory doctor or your actual
problems at the time of application. medical records.
The physical exam is paid for by the n If your application
insurance company and is scheduled is declined by one
company, you may
at a place and time that is convenient have alternative
for the applicant. No disrobing is options with other
required. companies.
• Request for medical records. A final
step in the underwriting process may include a request for a
statement of your health from your doctor and/or a copy of
your medical records.
Based on the information collected through the above steps,
the underwriting department will determine whether or not to
issue coverage. If coverage is issued, your health rating will be
determined and this will dictate your exact premium amount. This
means that the premium rate quoted by your LTC Planning and
Insurance expert may be revised. The quotes provided by these
professionals are based on “general underwriting guidelines,” using
the preliminary information you provide to them about your health.
While the premium amount quoted at the time of application is
usually accurate, the underwriting pro­cess must be completed
prior to determining the exact premium rate.
 Chapter 13: The Application and Underwriting Process 153

When the policy is issued, the LTC Planning and Insurance

ex­pert will review the details of the coverage and the final premium
amount with you.
You have 30 days to decide whether or not to accept the policy—
this is called the “free-look period.” This 30-day period begins on the
date you actually receive the policy. If you decide not to accept the
policy within this 30-day period, the insurance company must refund
the initial deposit submitted with the application and the policy is
null and void. If you agree to the conditions of the policy, including
the final premium amount, the coverage will go into force.
If you accept the policy, you will be asked to select the frequency
of your premium payments. Premium payments to the insurance
company can be made on an annual, semiannual, quarterly, or
monthly basis. Generally, discounts are available for selecting longer
durations between premium payments.
If your application is declined with one insurance company, there
may be options to obtain coverage with alternative insurance com-
panies. Your LTC Planning and Insurance expert will assist you in
evaluating these options.
154 Chapter 13: The Application and Underwriting Process

The Application
key and Underwriting
points Process
➤ The underwriting process may involve simply
completing an application, but it is more likely
that additional steps will be taken prior to
issuance or denial of the policy.
➤ The underwriting process must be completed
in order to determine the exact final premium
rate.
➤ The “free-look period” gives you 30 days to
decide whether or not to accept the policy
once it is approved and received.
➤ Generally, discounts are available for selecting
longer durations between premium payments.