Beware of Clean Sheeting

CLEAN SHEETING and why it’s only a good thing when you’re talking about putting fresh linens on your bed.

While the majority of insurance transactions take place without fraudulent intent, Underwriters do take notice when the health section of an application is all marked “no”. But why is that? You’d think submitting a clean application is a good thing, right? But to an Underwriter it’s unusual that someone is able to answer “no” to all health questions, especially given the time frames listed (5 years, 10 years, ever).

In our industry, clean sheeting is defined as “The fraudulent act of purchasing a life insurance policy without disclosing a pre-existing terminal illness or disease. “ Additionally, “This type of fraud is often done with both the knowledge of the purchaser and the agent involved.”

Perhaps applicants and/or agents assume pertinent history will be developed during the underwriting process and capturing it during the application process is not necessary? Or perhaps they are under the impression that answering “yes” to a medical question will result in an adverse underwriting decision or slow down the issuance of their policy? In fact, the exact opposite is true!

This is because Underwriters receive information from third party sources (e.g. prescription and public record databases) and conflicting information between those sources and the application must be reconciled. Without application disclosure, there’s actually more underwriting to be done, not less!

For example, a healthy 40 year old female with a history of emergency gallbladder surgery 2 years ago answers “no” to all medical questions but the underwriter receives a prescription record showing medications filled 2 years ago from two different physicians, one of which is a gastroenterologist.

To develop the conflicting information the Underwriter asks questions regarding the medications, the physicians, all visits with dates & outcome and may also send a gastro-intestinal questionnaire. Had the applicant instead answered “yes” to just two questions in the health section disclosing the gallbladder surgery, the additional requirements could have been avoided and the case sped through the underwriting process.

Disclosure of past and present medical and non-medical history is vital to the underwriting process. Consistency of the information presented lends to the credibility that all relevant information has been disclosed. Remember, the key to good field underwriting is asking all the medical questions, including past and present history.

HELPFUL HINT: Let your clients know that medications filled in the past (even if they are not currently taking) may trigger additional underwriting questions. This could help encourage disclosure of both acute and chronic medical history.

HELPFUL HINT: Try taking an application on yourself! I am a healthy 40-something female, consider myself an Elite risk and can answer “yes” to 4 questions in the health section.


Felicia McElhaney
AVP Underwriting, Business Acquisition