5 Key ‘Make or Break’ Life Insurance Trends

San Diego Life Insurance

San Diego Life Insurance

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New laws, emerging technology, fiscal uncertainty and changing marketplace perceptions are making big impacts on the life insurance industry, changing the landscape for consumers in many ways. This includes everything from how applications are filled out to how quickly coverage can be obtained to evolving rules surrounding drill down topics like marijuana procurement and use.

“Given the copious complexities, far too many put off buying life insurance or revising a current plan,” says field authority Brian Greenberg, founder and President of the innovation-driven True Blue Life Insurance agency. “Frustrated consumers cite high premiums and a glut of red tape among the reasons they shy away from purchasing or modifying a policy. However, some key common barriers and challenges that once blocked shoppers from securing great coverage benefits with ease—and at affordable prices—are a thing of the past. Other changes impact one’s ability to garner coverage at all.”

Specifically on both fronts, here are Greenberg’s top 5 trends affecting both life insurance consumers and life insurance agents, themselves: 

No medical exam policies gain ground amid enhanced access and affordability.  

No medical exam policies have always been popular, but consumers traditionally paid from 20 to 50 percent more than they would for policies requiring a medical exam. But no more, as equitably priced options are entering the market. As just one example, Savings Bank Life Insurance Company (SBLI), one of the most competitively priced term life insurance carriers, recently came out with a no medical exam option at the same exact price as their fully underwritten policies in the $500,000 and below bracket. 

As many other major insurance companies follow suit, the rest of the industry is realizing a “domino effect” whereby those offering no medical exam policies are lowering their prices in this same $500,000 and below bracket in order to compete. In addition, no exam policies are being issued least 50 percent faster than those requiring a medical exam, safeguarding consumer interests at a more expeditious pace.  

Life insurance companies engage in more extreme vetting. 

Especially without the benefit of a medical exam, insurance companies are looking to other sources for information as they consider a new policy application. In addition to vetting practices like checking the prospective insured’s motor vehicle department report, Medical Insurance Bureau (MIB) report and pharmacy report, there’s another somewhat surprising background information source insurance companies are utilizing: a credit report. 

In greater numbers, life insurance companies are running financial checks with the mindset that a person's financial background is a major factor in their life expectancy. Credit score, bankruptcy and tax liens are some of the fiduciary factors that can cause an application to either be declined outright, or to result in a policy being issued at a higher premium. 

When insurance companies can access a more holistic information set that includes financial records, they can make far quicker underwriting decisions—for better or for worse. 

On the upside, this is increasing the incidence of same day policy turnaround. Industry-leading life insurance outfits like North American Life Insurance Company, Mass Mutual and Fidelity are now offering applicants same day issue life insurance policies, and this year yet more companies will be making instant underwriting decisions for prospective customers. 

Aside from the ease and instant gratification benefits in general, this is especially good news for those who need life insurance quickly—whether to secure a business loan, finalize a divorce, or other financial or legal reason. As underwriters have become more resourceful in gathering applicant data and with intra-industry technologies allowing them to analyze and process that data more efficiently and accurately, agents are enabled to provide streamlined services to customers—a trend that’s fiscally benefitting the marketplace and the trade, alike.