Principal Underwriting Update

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With the start of a new year, I’d like to put a wrap on 2020, give my outlook for 2021, and share some exciting news about our Principal Accelerated UnderwritingSM program.

2020 review
Last year was unlike any other I’ve experienced over 30+ years in the industry. COVID-19 impacted most everything related to life insurance and created a couple big challenges we had to figure out:

  • How do we work within the confines of social distancing? We had to answer questions like: How would you be able to get together with your clients to complete applications? How would we get exams completed, or underwrite without them? How could we get medical records in a faster, more efficient way compared to the traditional APS (attending physician statement)?
  • How do we deal with the unknown effects of the virus? This uncertainty created a need for the following:
    • Limits based on age and risk class
    • Restrictions on coverage amounts—even those we were most comfortable underwriting and offering.

Navigating these issues required agility, and importantly, grace and understanding with each other. I appreciate your patience as we worked through these uncharted waters.

2021 outlook
It would be nice to announce that all the pandemic challenges of 2020 are behind us and that 2021 will be a return to normal. But I think the question we all face every day is, “What is normal, and will it look anything like it did on Jan. 1, 2020?” I can assure you from an underwriting perspective that things won’t return to exactly as they were pre-pandemic. But that’s a good thing.

The challenges of 2020 forced us to become faster and more nimble, experimental, and risk-aware (rather than risk-averse) as an underwriting organization. These competencies will serve us well and help us continue to advance our underwriting capabilities. We also re-examined many of our processes and evaluated if they still made sense. In many cases, we were able to come up with new, better ways.

Everything we’ve learned about effective treatments of COVID-19 and the availability of a vaccine will help guide our underwriting going forward. We’ve already seen some face amount limitations for younger and healthier applicants lifted. I’m hopeful that as we learn more about the virus and see the effectiveness of treatments and administration of the vaccine, coverage restrictions for older individuals and those with medical histories will also be relaxed. It likely will take some time, but I believe as we get further into 2021, our new sense of normal will start to take hold and it will feel better than the last nine months of 2020.

Accelerated Underwriting program enhancements
Last March, we introduced temporary underwriting guidelines to use with our Accelerated Underwriting (AU) program. They enabled us to underwrite more of your clients on a non-examination basis by using digital health data from various sources, including the patient portal. I’m proud of how quickly and effectively we were able to implement the temporary guidelines. I believe it exemplified our nimble, experimental, and risk-aware approach. This experience also provided tremendous insights into the potential future capabilities of AU. We’ve used those learnings to establish new AU guidelines outlined below that will allow more of your clients to benefit from this innovative program.

New AU program guidelines effective Feb. 15, 2021

Products Applicant age Maximum face amount Additional requirements
  • Principal® Term
  • Principal Universal Life Provider Edge IISM
  • Principal Universal Life Flex IIISM
  • Principal Indexed Universal Life Flex IISM
  • Principal Indexed Universal Life Accumulation IISM
  • Principal Variable Universal Life Income IVSM
 18-40 $3 million
  • Drop Ticket must be used to submit all term applications up to $3 million face amount (except in New York).
  • For individuals who don’t qualify for AU due to model score or knock out criteria, we’ll review to see if digital health data (DHD) can be used to help underwrite them without an insurance exam. DHD records will need to include results from an exam/lab within the prior 24 months.
41-50 $2.5 million
  • For face amounts greater than $2 million, DHD records will need to include results from an exam/lab within the prior 24 months.
  • Drop Ticket must be used to submit all term applications up to $2.5 million face amount (except in New York).
  • For individuals who don’t qualify for AU due to model score or knock out criteria, we’ll review to see if DHD can be used to help underwrite them without an insurance exam. DHD records will need to include results from an exam/lab within the prior 24 months.
51-60 $2.5 million
  • For face amounts greater than $1 million, DHD records will need to include results from an exam/lab within the prior 12 months.
  • Drop Ticket must be used to submit all term applications up to $2.5 million face amount (except in New York).
  • For individuals who don’t qualify for AU due to model score or knock out criteria, we’ll review to see if DHD can be used to help underwrite them without an insurance exam. DHD records will need to include results from an exam/lab within the prior 12 months.

 

Additional AU program details

  • You no longer need to request AU. All applicants who meet the age and face amount requirements will automatically start through AU and will only be removed if we determine they no longer meet eligibility. When this occurs, we’ll advise of the exam requirements needed to continue.
  • Drop Ticket must be used for all term submissions up to the stated maximum AU face amounts—except for applications written in New York. Term applications that don’t meet these guidelines will no longer be accepted beginning April 1, 2021. Further details will follow.
  • Client-completed Part B (online or phone) is required for permanent products.

Thank you for the opportunity to serve you and your clients. I’m excited about the AU program changes and the other enhancements we’re making to the new business and underwriting process to improve the client, financial professional, and agency experience. We look forward to a successful 2021.