Field Underwriting
Guidelines For Financial Underwriting

Our staff strives to provide our producers with the best underwriting materials in the industry to make writing business with National Brokerage easy and efficient.
When evaluating risks, financial underwriting is a critical step. Here are some brief guidelines to help justify the amount of insurance your client needs.
Personal Insurance (Multiple of earned income)
Age Factor
To Age 30 20x
31-40 15x
41-60 10x
61-70 5x
71+ Individual Consideration
Non-Working Spouse
Usually the maximum considered reasonable is ½ the working spouses' income, but individual consideration may also apply.
Key Person
Normally 5x income is considered reasonable. Under some circumstances, up to 10x income may be justified. To go beyond 5x income a cover letter and financials demonstrating a unique talent or a major contribution to profits may be required.
Estate Planning
The proper amount is principally determined by current estate tax laws and future estate tax expectations. Documentation would be needed on how the need was determined, and a copy of the estate/business plan if available would aid in the justification.
A growth factor of up to 5% per year can be used to project estate settlement costs. The maximum future projection period is as follows:
Age Years of Projection
To Age 65 10
65-70 5
71-80 2
Business Purchase/Buy Sell
Insurance will be limited to a reasonable appraisal value of the proposed insured's share of the business. Generally the amount of the coverage for operating entities does not exceed 10x the average net income. However, it is the job of the producer to provide the details on how the business was valued, and the formulas used, if any, and where appropriate a copy of the buy/sell agreement, along with the firm's financials.
At a minimum, all business cases should be accompanied by a cover letter describing the ownership details, ect. and valuations method used. Additional documentation is dependent on case characteristics and very by size and complexity. Generally cases over $1,000,000 need financial data via inspections, financial questionnaires, or where appropriate, the firm's financials. This will vary from insurance company to company.
Business Creditor
Insurance is usually limited to 80% or less of the business loan amount. The loan must be for at least five years. Generally this coverage ties into key person coverage.
Documentation Guidelines
While this will vary on a company by company basis, here are some generally accepted guidelines.
  • Cover Letter – Should be used when coverage applied for is not self explanatory or involves unusual circumstances.
  • Inspection – Most Companies have published guidelines indicating when the inspection is required.
  • Financial Questionnaire – Generally required at face amounts of $1,000,000 or above.
  • Personal/Business Financials, Tax Returns, Estate and Business Plans – Normally required for face amounts of $1,000,000 or above where the cover letter, inspection, or financial questionnaire do not clarify need. Also when required when 3rd party verification is needed. To save time on larger face amount cases, we suggest this information be provided up front.
If you have any questions, please contact your Regional Sales Manager.
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