click to edit master lead-in head strength through innovation karen sweeney, chief financial...
TRANSCRIPT
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Strength through Innovation
Karen Sweeney, Chief Financial Underwriter
Kathy Fell, VP & Head of AXA’s Brokerage Underwriting
AXA Equitable’s Underwriting
Meets AgencyONE
Cat.# 144773 (2/13) For Financial Professional Use Only. Not for use with the general public.
click to edit master lead-in headagenda – financial due diligence
strength through innovation
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• Who We Are
• What We Do
• How We Add Value
• How YOU can help US
For Financial Professional Use Only. Not for use with the general public.2
click to edit master lead-in headabove all else, we need to be good with numbers
some simple mental calisthenics to start our session
click to edit master lead-in headdoes anyone have…
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five financial experts with over 75 years of combined insurance experience
• Develop financial solutions for complicated or unique case designs such as Premium financing and trust-owned coverage
• Utilize their accomplished investigative skills to access public records and Internet databases
• Assist with in-house reviews that validate submitted financials which may eliminate the need for additional financial requirements
For Financial Professional Use Only. Not for use with the general public.5
who we are
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For Financial Professional Use Only. Not for use with the general public6
team structure
Mary Bates,Head of Life Underwriting
Michael Tunney,Head of
Financial Due Diligence
Karen SweeneyChief Financial Underwriter
Anna NapoliAssistant Manager
Tabatha Johnson, C.P.A.Chief Financial Underwriter
Mark BishopLegal Assistant
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• “mature” unit embedded within the Underwriting area to provide guidance regarding case designs, client information, EOLI issues
• backgrounds include:
Life Underwriting Experience
Certified Public Accountant
Certified Fraud Examiner
Claims Adjudication
Paralegals
• work in concert with Underwriting Management and Advanced Markets to ensure underwriters have information at their disposal to best assess the cases presented to them
more on who we are – AXA Equitable’s unique position
For Financial Professional Use Only. Not for use with the general public.7
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• additional resource for underwriters to better understand issues that are driving the sale of the policy
• sounding board for underwriters to discuss items of concern they have identified
• identify trends in financial underwriting issues, and provide additional training and education to help underwriters better understand the financial presentation of the application
• verify financial presentation is accurate
: allow our Underwriters to spend their time assessing risk
what we do - ultimate role
For Financial Professional Use Only. Not for use with the general public.8
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• getting to “YES”
• determining premium paying ability
• estimating net worth
• legacy planning – thinking about future generations
• key components for faster track
: allow our Underwriters to spend their time assessing risk
line: allow our Underwriters to spend their
putting theory into action
For Financial Professional Use Only. Not for use with the general public.9
click to edit master lead-in headcase study #1 - things aren’t always what they seem
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Founder and CEO of commodities trading company
States annual income is $1,000,000+
Business Tax Returns, page 1, suggest significant losses
How does the AXA Underwriter navigate through this presentation?
Female, age 49, non-smoker
Applying for $30 million, 10 year term policy
Purpose of insurance: key person and buy-sell
click to edit master lead-in headfirst glance – 2010
: allow our Underwriters to spend their time assessing risk
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For Financial Professional Use Only. Not for use with the general public.11
click to edit master lead-in headsecond glance – 2011
: allow our Underwriters to spend their time assessing risk
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For Financial Professional Use Only. Not for use with the general public.12
click to edit master lead-in headthe first clue – income had to be somewhere
: allow our Underwriters to spend their time assessing risk
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click to edit master lead-in headthe second clue – balance sheet and partners’ capital accounts
: allow our Underwriters to spend their time assessing risk
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For Financial Professional Use Only. Not for use with the general public.14
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: allow our Underwriters to spend their time assessing risk
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• Schedule K-1
did not receive any portion of the Guaranteed Payment to Partners
received distributions of nearly $3.2 million in 2011
net capital account totaled over $11 million
additional financial statements showed an additional, wholly owned subsidiary that contributed both annual income and increased equity
Result: Financial Due Diligence communicated a comfort level for face amount applied for to the underwriter
the deep dive
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click to edit master lead-in headcase study #2 – finding the money
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Proposed Insured’s net worth: $52 million
Annual Income: $1,125,000
Premiums: nearly $670,000 first year; subsequent premiums nearly $300,000 annually
Male, age 52, non-smoker
Applying for $25 million IUL
Purpose of insurance: family protection, income replacement and estate planning
Occupation: self-employed real estate development and management
In Force Coverage: $9,116,000 (not replacing)
click to edit master lead-in headthe financial questionnaire
: allow our Underwriters to spend their time assessing risk
line: allow our Underwriters to spend their
For Financial Professional Use Only. Not for use with the general public.17
click to edit master lead-in headthe tax return
: allow our Underwriters to spend their time assessing risk
line: allow our Underwriters to spend their
For Financial Professional Use Only. Not for use with the general public.18
click to edit master lead-in headputting the puzzle together
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Financial Due Diligence used the tax returns as a resource to develop names of business entities through which real estate would be owned by the proposed insured
Financial Due Diligence subsequently verifies extensive real estate holdings owned in various LLC names via public information
consumer debt of $2,600,000 all paid currently and without history of credit delinquency suggests income well in excess of what the tax returns reflect
supporting Schedule K-1s show significant cash flows from business entity distributions and significant partner capital account balances
Result: annual income and net worth as reported on the financial questionnaire appear reasonable; concern regarding premium affordability addressed
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Two options:
Option A: 1040 tax return
estimating net worth
For Financial Professional Use Only. Not for use with the general public.20
click to edit master lead-in headestimating net worth of investment accounts
: allow our Underwriters to spend their time assessing risk
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For Financial Professional Use Only. Not for use with the general public.21
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Option B: Use of 4506 - T
option b: 4506 - T
For Financial Professional Use Only. Not for use with the general public.22
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Wages and investment assets
estimating net worth with the 4506 - T
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Business Interests
estimating net worth with the 4506 - T
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click to edit master lead-in headprojected inheritance – financial due diligence role
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Guidelines:
• Generation 1 (G1) must be: a) age 70 or older, or b) under age 70 with evidence of a life expectancy under 5 years
• Require confirmation that established estate planning is in place that involves transfer of estate to the next generation
• Verification of net worth of G1• An appreciation factor may be considered on a case-by-case basis
(possible 3-5% for max period of 10 years), subject to the structure of the inheritance planning, details of assets to be inherited (value and type of asset), and review by the Financial Due Diligence Team
projected inheritance
1+1 = 2Turn 1 sale into 2 (or more!)
AXA Equitable now financially underwrites cases based on the projected inheritance of the Insured
The assets of one generation can justify life insurance coverage for the next
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what is required to confirm established estate plan is in place
• can be in the form of:
a copy of the Irrevocable Trust, if one has been executed
confirmation (from attorney or some appropriate third party, not the Proposed Insured) verifying Inheritance to take place in the next 5-10 years; or
a copy of Parent's or Bequeather's Will and Estate Planning documentation
confirmation guidelines
GE-0000026
click to edit master lead-in headfinancial case study – projected inheritance
For Financial Professional Use Only. Not for use with the general public.27
Proposed Insured’s individual net worth, exclusive of future inheritance, is $20 million
Mortality calculation at the Proposed Insured’s age 45, would qualify for a total line of $43 million
Bequeather/mother’s net worth is $28 million
Mortality calculation at mother’s age 75 qualifies for $27 million which represents son’s possible estate tax liability
Male, age 45, non-smoker
Applying for $65 million IUL (AXA’s Jumbo Limit)
Purpose of insurance, estate planning, Sole heir to his 75-year old mother’s estate
Beneficiary is an Irrevocable Life Insurance Trust for the Benefit of the Proposed Insured’s Children, Grantor Mother
click to edit master lead-in headfinancial case study – projected inheritance
For Financial Professional Use Only. Not for use with the general public.28
the solution:
By adding the current projected death benefit need of the Proposed Insured and the projected future inheritance from the mother’s projected estate need, AXA was able to justify the amount applied for: $65 million
Our competition would have allowed only $40 million
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value of anticipation, partnership, and communication
• cover letters
• secure complete financial information
• review finances prior to submission to determine if complete financial picture is being presented
• secure additional financial Info if it will be required
If large % of Net Worth is in Real Estate, secure addresses
If large % of Net Worth is in Oil/Gas Royalties, secure valuation information, last royalty check, 1040s, etc.
• include financial information with Informal Review Process
moving things along…faster track
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click to edit master lead-in headagenda
strength through innovation
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• Who We Are
• Special Programs
• Underwriting Niches
• Marketing Resources
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click to edit master lead-in headAXA Equitable’s most competitive strength
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who we are
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our underwriting teams
• 80+ Underwriters; average of 20+ years experience
• Expertise in navigating the grey by taking a holistic
approach to underwriting each case
• Understand the competitive nature of the business
• Options oriented; solutions driven
• Dedicated to building and maintaining relationships
our workflows
• Maximize our strong experienced staff, with easy and
direct access by phone or email
For Financial Professional Use Only. Not for use with the general public.32
who we are — underwriting teams
Large Case
“Concierge Service” and expert case design
General
Dedicated Relationship Management for a tailored response to individual agency needs
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four medical directors, combined at three sites, with a total of over 40 years experience
• Committed to research and development of new medical
updates keeping our guidance cutting edge
• All are Insurance Medicine Board Certified each with
unique focus and experience
• Provide holistic training and educational opportunities
both internally and externally
For Financial Professional Use Only. Not for use with the general public.33
who we are
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AXA Equitable retention and automatic limits(standard or better risks – in millions)
1 Lower limits apply to juvenile insurance2 For policies with increasing amounts, i.e., policies with Return of Premium Death Benefit Rider (ROPR), the ultimate amount per the
illustration must be used for retention and automatic reinsurance calculations.3 For ASUL products, death benefit is limited to our retention.
underwriting programs
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1 3
For Financial Professional Use Only. Not for use with the general public.
• Large Retention Capacity
• Strong Reinsurance Relationships
Highlights: 2
click to edit master lead-in headunderwriting programs
For Financial Professional Use Only. Not for use with the general public.35
predictive analytics “EasyUnderwriting” programAXA is piloting a new underwriting process that uses technology to analyze information application information.
This data helps determine the underwriting rate class and opportunity for potential “Jet Issue”
Benefits:
Faster cycle time for cases that meet predefined criteria
Underwriting decisions, on average are made within 3 business days
Cases that fit criteria do not require exams and labs
An easy, enhanced customer experience
Please contact your Underwriter or RVP for further details.
important
click to edit master lead-in headunderwriting programs
For Financial Professional Use Only. Not for use with the general public.36
good health credit program (GHCP)Giving credit where credit is due!
Can a Proposed Insured with a demonstrated healthy lifestyle get credits
to improve his or her overall rating? YES!
In fact, eligible Standard cases can move to better than Standard rates.
Factors considered include:
Favorable cardiovascular risk factors
Good preventative medical care
Lifestyle changes and improved health habits
click to edit master lead-in headunderwriting programs
For Financial Professional Use Only. Not for use with the general public.37
good health credit program
Unlike traditional limiting industry table shave programs, AXA
Equitable’ s GHCP allows credits for:
All Products
Face amount limits — up to available full retention:
$20 million individual or $25 million survivorship
Both lives on a survivorship policy
Cases rated up to Table D
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professional athletes, entertainers and high profile individuals
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underwriting niches and advantages
All Term and Permanent
Full Retention
Regular Schedule
N/A
None
PRODUCTS
RETENTION
COMPENSATION
TEAM LIMITS
REINSURANCE
Personally-Owned
10-Year Level Term and ART
Full Retention
Levelized Schedule
No Limit
None
Business/Team-Owned
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underwriting niches and advantages
For Financial Professional Use Only. Not for use with the general public.39
preferred classification available with personal history of cancer
Better than Standard offers can be considered on a case-by-case basis for some cancers with very favorable prognosis.
This would include:
Melanoma-in-situ (Clark’s level 1 melanoma), without history of dysplastic nevi
Papillary or mixed (papillary-follicular) carcinoma of thyroid
Testicular seminoma
Carcinoma-in-situ or CIN/dysplasia of cervix
Carcinoma-in-situ of colon, without subsequent adenomatous polyps
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underwriting niches and advantages
For Financial Professional Use Only. Not for use with the general public.40
favorable factors for consideration of better than standard with personal history of cancer
Non-smoker
Early stage and early grade of tumor (in situ or stage I) at time of diagnosis and treatment
Surgical treatment only (no radiation or chemotherapy)
Current age 50 and up
10 or more years since cure of cancer
Excellent follow-up and routine preventive health care
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prostate cancer
• Early stage, low grade prostate cancers in older
males are often Standard
• At ages 60 and up, non-apical, organ confined
disease, Gleason 8 and lower, treated by
prostatectomy, with favorable PSA’s for 5 years -
may qualify for Standard!
• Age 66 and up, even with a PSA rise, AXA can
offer on selected cases of biochemical relapse of
Prostate Cancer
For Financial Professional Use Only. Not for use with the general public.41
underwriting niches and advantages
New!
Transient increases of PSA that return to acceptable ranges on their own without any form of treatment will not be considered a relapse
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Male, age 69
IUL, $3 million
No coverage in force or applied for
Prostatectomy at age 62 for adenocarcinoma of the prostate, Gleason score 7
Pre-surgery PSA (8)
Annual follow-ups with PSA values <(0.1)
18 months ago, PSA rose to (0.2). At six-month recheck PSA was (0.3).
With no further intervention, PSA dropped back to (0.1) one year ago
Insurance blood profile PSA is stable at (0.1)
Otherwise healthy individual taking no medications, normal blood pressures, lipids and family history.
medical case study — prostate cancer
For Financial Professional Use Only. Not for use with the general public.42
AXA offers Standard
click to edit master lead-in headunderwriting niches and advantages
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MGUSMonoclonal Gammopathy of Undetermined Significance is a condition in which a paraprotein (IgG, IgM and IgA ) is elevated in the blood.
Occurs in 5% of those over age 70
AXA’s ability to provide more favorable offers has improved
All cases of Multiple Myeloma are preceded by MGUS, but not all cases of MGUS will progress to Multiple Myeloma
important
Lower identified risk factors result in lower ratings!
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Face Amount—$2,500,000, UL
Male age 66, Non-smoker
Otherwise healthy individual taking no medications, normal blood pressures, lipids and family history
Diagnosed with MGUS a year ago when visiting his MD for a routine physical, he has remained asymptomatic.
Extensive lab work included:
Serum M-protein level < 3g/dl All IgG, IgM and IgA levels within acceptable ranges
Bone marrow plasma cells were < 10%
All IgG, IgM and IgA levels within acceptable ranges
Bone marrow plasma cells were < 10%
Urine M-protein < 1gm/day
Physical exam favorable with absence of organ or tissue impairment related to myeloma
medical case study - MGUS
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click to edit master lead-in headmedical case study — MGUS
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AXA offers Standard w/Flat Extra $2.00/1000
Due to recent Medical Manual updates, AXA was able to give this client the most favorable rating of Standard with a Flat Extra of $2.00 per thousand. Prior to AXA’s MD Research and Manual updates, the Flat Extra could have been as high as $7.00 per thousand.
click to edit master lead-in headunderwriting niches and advantages
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rheumatoid arthritis Rheumatoid Arthritis (RA) is an autoimmune form of arthritis that causes pain, swelling, stiffness and loss of function in the joints. Can also affect eyes, mouth and lungs.
Favorable cases are those in remission for more than 1 year, could now be Standard and eligible for Standard Plus via the Good Health Credit Program
Will still consider someone on medication for better than standard if they meet all ACR Criteria
Use of disease modifying Anti-Rheumatic drugs no longer considered an adverse factor in treatment of RA, leading to more aggressive offers.
Lower identified risk factors result in lower ratings!
For Financial Professional Use Only. Not for use with the general public.
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Face amount: $5,000,000, IUL — Female, age 49, Nonsmoker
Rheumatoid arthritis, diagnosed at age 46. Past treatment for
depression, no longer on RX.
2009-Minimal joint pain in hands and feet, no morning stiffness or swelling, started Methotrexate
2010-significant discomfort in left ankle. Rx Enbrel and Prednisone taper (10 mg/day for 3 days, then drop to 5 mg/day for 3 days, then discontinue)
2011-RA stable, no joint swelling, no pain other than shoulders, but appears to be due to muscle strain, not RA.
2012- still taking Enbrel and Methotrexate, no swelling, no morning stiffness, no joint pain
Satisfies all ACR criteria for remission for over 1 year. No additional debits for current or past medication usage Good Health Credits available for Cholesterol, No tobacco usage, Family History, Build, Blood Pressure, regular follow-up with MD.
medical case study - rheumatoid arthritis
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click to edit master lead-in headmedical case study — rheumatoid arthritis
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AXA offers Standard Plus
Rheumatoid Arthritis in remission, even while on
maintenance medications, including multiple Disease
Modifying Anti-Rheumatic Drugs can qualify for better
than Standard rates.
click to edit master lead-in headunderwriting niches and advantages
For Financial Professional Use Only. Not for use with the general public.49
EBCT results
AXA looks at the whole case giving credit for favorable routine care and
control of blood pressure and cholesterol and other coronary risk factors:
Percentile 0 – 74: all Preferred levels available
Percentile 75 – 89: can consider for Preferred or Standard Plus with normal
imaging stress test, favorable risk factors, etc.
Percentile 90+: Standard is best offer, with normal imaging stress test,
favorable risk factors, etc.
important
A cardiac catheterization report remains the gold standardif done as part of the cardiac workup
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Face Amount: $5,000,000, VUL
Male age 65, Nonsmoker
Treated Hyperlipidemia, Cholesterol ratio 4.5
Blood Pressure 120/80
EBCT score of 70th percentile
All other risk factors favorable
medical case study - EBCT
For Financial Professional Use Only. Not for use with the general public.50
AXA offers Preferred Elite
click to edit master lead-in headunderwriting niches and advantages
For Financial Professional Use Only. Not for use with the general public.51
sleep apnea
Sleep Apnea is a sleep disorder characterized by abnormal pauses in breathing or instances of abnormally low breathing during sleep.
All Preferred classes are available with mild sleep apnea (AHI less than 20, O2 saturation > 85%)
All Preferred classes available on cases treated with effective CPAP therapy, with demonstrated compliance
click to edit master lead-in headunderwriting niches and advantages
For Financial Professional Use Only. Not for use with the general public.52
barrett’s esophagus
Usually related to Chronic GERD. Treatment: Gastric suppression with proton pump inhibitor (PPI)
Complications: Low grade dysplasia
High-grade dysplasia
Esophageal adenocarcinoma
Higher incidence in males than females. Over age 45 is highest risk group.
More cases can qualify for Standard and upgrade to Standard Plus via the Good Health Credit Program
Resolution on endoscopy or biopsy may qualify for better offers
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Male age 55, 5’10”, 200 lbs.
Quit smoking 18 years ago
$6,000,000, VUL and Term 20 coverage
Family History: Father alive - age 77,
Mother died at 71 of colon cancer
Treated Hyperlipidemia, Cholesterol ratio 3.5
Blood Pressure 120/80
All other risk factors favorable
Referred to gastroenterologist 3 years ago with worsening reflux symptoms not relieved by medication. An endoscopy was performed revealing Barrett’s Esophagus with no dysplasia.
Follow up endoscopy this year confirmed Barrett’s Esophagus with no dysplasia
medical case study – barrett’s esophagus
For Financial Professional Use Only. Not for use with the general public.53
AXA offers Standard Plus
click to edit master lead-in headunderwriting niches and advantages
For Financial Professional Use Only. Not for use with the general public.54
bariatric surgerySignificant, sustained weight loss over 2 years.
Look for improvement in:
hypertension
diabetes
diet and exercise
important
Cases can be considered for all levels of Preferred after two years based on the merit of the improvement, stability of the treatment, and its effects on all associated impairments
click to edit master lead-in headunderwriting niches and advantages
For Financial Professional Use Only. Not for use with the general public.55
aviationAXA Equitable offers Private Pilots the opportunity to qualify for all Preferred Classes for risks evaluated up to $3.50/1000 for their aviation activities
Licensed private pilots with 100 or more solo hours and flying between 26 and 150 hours a year incur no extra premium assessment
important
Cases can be considered for all levels of Preferred with 100 or more solo hours and flying between 26 and 150 hours a year
click to edit master lead-in headAXA Equitable
For Financial Professional Use Only. Not for use with the general public.56
what sets AXA apart?Here is what sets us apart from the competition…
important
marketing support
high retention
GHCP credit program
underwriting expertise
financial team
medical directors
click to edit master lead-in headunderwriting marketing support
For Financial Professional Use Only. Not for use with the general public.57
Underwriting Case Studies
Marketing Flyerswww.axa-equitable.com
My Business > Underwriting
podcasts
Brainsharks
underwriting campaigns
thank you
Please visit www.axa-equitable.com for more information
58 G30859For Financial Professional Use Only. Not for use with the general public.
This seminar is for informational uses only
All guarantees are based on the claims-paying ability of AXA Equitable.
This material should not be considered tax or legal advice. Clients should
consult their own tax and legal advisors regarding their particular
circumstances.
© 2013 AXA Equitable Life Insurance Company. All rights reserved.
1290 Avenue of the Americas, New York, NY 10104, (212) 554-1234.
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disclosure
For Financial Professional Use Only. Not for use with the general public.