John currently has $250,000 in existing life insurance coverage and earns $70,000 annually. Based on his income, he qualifies for an additional $750,000 of term life insurance from AIG, for a total coverage amount of $1,000,000. Samantha applies for $500,000 as a homemaker. As her husband Chris earns $120,000 and applies for $1,000,000, Samantha likely qualifies for the full $500,000 given typical carrier guidelines for matching a working spouse's coverage up to $1,000,000 for non-working spouses. Financial underwriting considers an applicant's income, finances,

1. FINANCIAL JUSTIFICATION Welcome to our financial justification class….

2. What is Financial Underwriting? Financially qualifying you for a life insurance policy using your income and financial situation.

3. Why Financial Underwriting is important? Financial underwriting is important in order to prevent “ over Insurance ”. “ Over Insurance ” is when face amount exceeds client’s financial needs.

4. Company Ages 31-35 36-40 41-45 45-50 51-55 56-60 61-65 Over to 30 65 American 25X 25X 25X 20X 20X 15X 10X 10X 5X General Over 71-Individual Consideration Banner 30X 30X 30X 25X 25X 20X 15X 15X 66-70=5X-10X Life 71 & Up by Individual Consideration Genworth and 30X 30X 30X 20X 20X 15X 15X 10X 66-69-10X Genworth NY 70 & Up-5X Liberty Life 20X 20X 20X 15X 15X 10X 10X 7X 3-4X Protective 20X 20X 18X 16X 14X 12X 8X 8X 6X Life & Ann Pruco 30X 25X 25X 20X 20X 15X 15X 10X Age 66-70 10X Prudential * Age 71-80 5X ReliaStar 30X 25X 25X 20X 20X 15X 15X 10X Age 66-70 10X Age 71+ Individual Consideration Transamerica 25X 25X 25X 20X 20X 15X 10X 10X Age 66-70 5X TANY Age 71+ Individual Consideration US Life 25X 25X 25X 20X 20X 15X 10X 10X 5X Over 71-Individual Consideration West 20X 20X 18X 16X 14X 12X 10X 8X 6X Coast William 30X 30X 30X 25X 25X 20X 15X 15X 66-70-5X Penn 71 & Up by Individual Consideration

5. Income Replacement A client’s income is the most important factor looked at in determining the amount of insurance that will be granted for income replacement. But what about applicants without income?

6. Applicants without Income Most of our carriers will consider College students working on general undergraduate degree-$250,000 Advanced Degree, medical school, law school-Up to $1,000,000. Recently unemployed in industry with good future employment potential-$250,000 Disabled but insurable-Amount of disability times income factor

7. Non-Working Spouse Most of our carriers will match the working spouse’s coverage to $1,000,000. Why? Some other carriers like AIG will consider for more than $1,000,000 consider half the amount of working spouse, subject to max of $2,500,000. For amounts over $2,500,000 individual consideration, based usually on estate planning needs.

8. Business Insurance Key person: Will consider 5 to 10 times income depending on complexity of job. Buy/Sell: Market Value of applicants portion of business.

9. Bankruptcy Chapter 7-Must be discharged for at least 12 months w/o any new substantial amount of indebtedness. Chapters 11,12, and 13: Must be making regular debt payments as determined by court. Amount of income considered will be reduced by repayment amount. Multiple Filings-more than 2- decline *****This applies for most of our carriers****

10. Insurable Interest In order for a life insurance purchase to be financially justified, the beneficiary must have an insurable interest in the policy. “What is the financial loss the beneficiary will sustain in the event of the insured’s untimely death?”……by Kim Diaz

11. Exercise John is applying with AIG for $1,000,000 Term 20. He currently is replacing a Term policy with Prudential for $150,000 and owns a MetLife Whole Life policy for $100,000. John is 43/yo and earns around $70,000/yearly. Question: 1. What is John’s total line of insurance? 2. How much insurance he currently have? 3. Does he qualify? If so, how much extra he can get?

12. Exercise 2 Mrs. Samantha M Lovejoy is 34 years old and she’s applying for $500,000 with ING (homemaker). Spouse Mr. Chris L Lovejoy is applying for $1,000,000 with ING as well he is 35 years old and earns $120,000/yearly. ING posted an outstanding requirement on Samantha’s case “Financial Justification; Please submit financial justification as client is a homemaker and there is nothing listed in Other Income” QUESTION: Does she qualify for the full $500,000? If so, what is your response to the carrier??

13. Call is made after we confirm the total amount the PI can qualify for. Always check to make sure the carrier is correct and took everything into consideration. (Check related cases if available.)

14. Keep In Mind Discussions about life insurance in general are “touchy” subjects. It’s important to establish a good relationship with your client’s at the beginning and keep the relationship going all the way to the end. Give them re-assurance that you are here for them, and we are working to get them the best rate and coverage available. Some client’s can be difficult, but just make sure you are doing everything right and have asked for help when you need help. Discussions about health, financial, and criminal history are all sensitive subjects. However, this information is required to obtain an approval. Always keep the client happy- remember the client is always right even if they’re not. We just have to find a way to make it seem like they are right while we obtain the information. Another very important key to having a successful call is preparing!

15. Preparing for a Call Gather all the information you need for the call. Determine which information you are going to ask for first. (Always ask the easiest stuff first, and the hardest or sensitive information last.) Think about the questions the client will ask you before giving you that information. Make sure you have the right answers to those questions before you make the call. If you have to ask a client for information and you don’t know why it’s needed don’t call the client. Including forms- if you don’t know what the forms are or what they are for, ask first and then contact the PI. If the client gets upset always re-assure them that you will stay on top of their case, and will push the case through as fast as possible.

16. Can you handle a financial call? Yes, now we have the knowledge, so lets apply that with our clients……

17. Thanks for coming…..!!