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What is multilife underwiriting?

underwriting of groups of life insurance applicants primarily susing nontraditional approaches to risk selection


What is considered "nontraditional approaches" when u/w multilife

1. Guaranteed issue (GI)- which does not include any traditional individual u/w
2. Simplified issue (SI) which includes some nominal amount of individual u/w


What products are included in multilife u/w

UL, Variable life, private placement products that can involve (COLI) and bank-owned life insurance (BOLI) or variations thereof.


What is COLI?

characterized primaril.y by plans intended to provide benefits to meet the needs of executives.


What is BOLI?

a cost efficient and effective means for banks to offset rising employe benefit costs.


COLI accounts for the greatest dollar volume of in forfce multilife business what does BOLI account for?

accounts for growing share of the new business written.


What are CHOLIS?

Charity owned life insurance (CHOLI) known as foundation owned life insurance (FOLI). They are plans designed to insure multilife or large numbers of lives on behalf of a charity or foundation. The oft stated purpose of CHOLI is to provide an assured stream of ongoing revenue to the charity from the LI proceeds.


What is the primary focus of all multilife underwriting?

- minimized through the use of traditional u/w techniques.


What are Voluntary vs Nonvoluntary Plan designs?

Nonvoluntary plan designs plan participation is compulsory and the amount of LI to be placed on each life is fixed.
Voluntary plans are not as protected form anti-selection. People can choose to participate and amount of coverage is open to choice, therefore evidencfe is usually required.


What do you call voluntary plans that have limited underwriting?

SI programs.


Define the benefits of a plan described as "executive" which is determined by whether or not the eligible employe qualifies.

1. company management is provided with g/l to ensure that all current and future eligible employees are properly enrolled
2. plan administrator is provided with g/l as to who to enroll in the program
3. insurance companyh can be confident that the employer remains consisten with the agreed upon eligibility requirement.


Why is eligibility requirements an important criteria?

This aids in establishing the expected overall mortality of a multi-life plan, and as such helps the plan to avoid becoming unprofitable due to excessive and unexpected claims.


What are some reasons for potentially adxverse mortality when designing a plan for multilife u/w?

1. greater amount of coverage generally tends to be on the older lives simply because, on average they have acquired the higher position and higher sales due to longer employement.
2. number of very highly compensated company executives is typically made up of a very small group of lives. Small Groups do not allow for the same spread of risk as large groups, sincef a single claim will have a much higher impact on an oerall group mortality if the group is small.


Spread of risk relates to what?

how much insurance is permitted on any one life relative to the size of the group and how much is permitted on any one life relative to the average death benefit for the group.


True or False:
Insurers must factor in the spread of risk when pricing a multilife plan and deciding weather to allow guaranteed or simplified issue.



What is an aggregated-funded plan design?

the emplyee can allot any amount of insurance amount of salary he or she wishes within the constraints of the employer's plan.
- no correlation between the individuals financial contribution and the amount of life insurance purchased on his or her life.
- all monies are pooled together (aggregated) and spread equally over the likves being insured.


Who designs the premiums for an aggregated-funded plan design?

the plan administrator, either by equal life coverage on each or by spreading the pooled deferrals as equal premium.


Does the employee have ownership rights in the aggregated-funded plans?

therefore there is no prospect of individual selection.


What are Tiered plan desgins?

plans where amounts of insurance vary by title or salary groupings.
- comprised of several differing levels employee classes.
- they have flat amount of coverage that increases in steps, based on set criteria usually salary or titles.


What makes tired plans less favourable than plansbased on a multiple of salary?

the large percentage jump in death benefit as one moves from one title to the next or one salary band to the next.


what type of plans are more favourable froma risk selection perspective?

plans utalized for deferred compensation that are aggregate-funded
- the motivation for these plans are entirely secondary to the goals of both the participating employee and the emplyer


What are the least favourable designs from an u/w perspective?

employer paid but individually owned plans, such as a 162 executive bonus plans.
- why? the individual can decide whether or not to keep the coverage when they retire or are terminated.


What is the differences between the COLI and BOLI businesses and the CHOLI and FOLI businesses.

1. one key difference is the lack of employer/employee relationship. - voluntary plan on the part of participants and thus increases the potential adverse selection
2. assuming lives to be insured are individuals who are donors to the charity or foundation, (older over younger)
3. no assurance these individuals can be classified as actively at work.


What are the different types of methods of underwritiung one may see with multilife insurance.

1. full u/w
2. bundle u/w
3. simplified issue
4. guarenteed issue
5. some combination.


What are the hurdles and risks of full underwriting multilife insurance?

1. size of the group- Full u/w can compromise plan objectives, and some individuals could be dec
2. Any adverse decision could result in loss of comission
3. costly

* Least commonly used.


What is bundle underwriting?

full underwriting where one or more substandard risk are accepted std, in the idea that others are preferred and SET
- not a perfectg solution
2. costly still


What is simplified Issue?

SI always entails an abbreviated form of u/w with less evidence.
- contains an abbreviated app , and u/w can accept or reject coverage or get more information.


What is guaranteed issue

1. most desirable method of underwriting for the producer
2. usually has a condition in which the participant needs to be actively at work. and a provition which states employyes must not be ill 3 months before enrolling.
3. lease expensive and most efficient
4. utilizes an abbreviated application,
5. uses an employee consent form


In corporation owned guaranteed issue multilife policies what is a consent form?

1. the representative of the corporation completes a msater application and the individual lives complete a consent form. The purpose is
1. provide acknowledgement by each participant that he/she consents to be insurerd with the understanding that the employer will own the policy and receive the proceeds.
2. Material representation regarding actively at work or SM hx can be contested.


What factors keep the cost down for GI issued applications

1. must include active workers, which exclused elderly risk
2. most employee groups tend to be STD assessment overall
3. the u/w contributes to relatively favourable mortality by making sure that
a) the plan design is non-selective as to the coverage and paticipant
b) the group does not present any untoward risk inheent in their business
c) the spread of risk within the plan is acceptable