Many of the clients that we speak with don’t know the exact amount of life insurance coverage that they want. In many cases the amount of coverage they want is dictated about the cost of policy. To determine the cost on the policy it requires them to go through the process of underwriting. At the end of underwriting they will get an insurance rating, such as preferred elite, preferred, standard, etc. and that will actually determine the rate. With the rate established, we will truly be able to tell them the cost of the various face amounts. If they are up in the air then we will suggest that they underwrite and get approved for the maximum amount of coverage that they might want. During the underwriting process, which takes about 6 weeks, they can think about what they truly want for face amount.
It makes sense to underwrite for the max, as it is easy to go to the carrier to cut down the face amount to a lower number. The only thing that they can’t do is go up. In other words, if you try and go up in coverage amount it may require new underwriting. If you have to re-underwrite that can present a hassle for the client and really makes little sense to do it that way. When you apply with a carrier for coverage, you have no obligation to the face amount or even to accept the policy, so why not just underwrite for the most you might actually want in coverage.