What is No-Exam Life Insurance and who qualifies?
There are two things that most people do not like about life insurance. First is the exam, second is the wait. With the help of data analytics, many people will no longer need a medical exam and the long wait period for life insurance approval is reduced dramatically. Big data and life insurance companies are teaming up to significantly disrupt the longstanding life insurance business model and make it much easier for many people to get life insurance. The result is a low-priced term life insurance policy that is approved quickly.
Thanks to the brilliant work of statisticians and IT specialist, the long wait to be approved for life insurance is being reduced to a matter of minutes for some people. For a policy to be finalized and issued it is between one and five days. Plus, no exams, no blood test, no urinalysis, and no doctor records are required. Here is the concept. If you fit within these parameters, then the No-Exam Life Insurance is for you.
You are between the ages of 18 and 60
You want between $100,000 and $1,000,000 of life insurance.
You are a healthy non-nicotine user.
You have a clean driving record.
You have an acceptable credit history.
Your medication history is minor.
How No-Exam Life Insurance works
Statisticians and IT specialist have determined that certain patterns exist that allow them to build an algorithm which determines a person’s mortality based on information gathered from drivers’ records, pharmacy records, and credit history. Other factors are being added as the data analytics concept is developed by different companies. Per the Centers for Disease Control, “As of 2012, about half of all adults—117 million people—had one or more chronic health conditions” such as “heart disease, stroke, cancer, type 2 diabetes, obesity, and arthritis” (Wart, Schiller, & Goodman, 2014). With that logic, fifty percent of people should be healthy and able to qualify for No-Exam Life Insurance.
All the statistics that are used to issue No-Exam Life Insurance have been available for years; it has been just a matter of the technology being developed to bring it all together. In 2012 a LexisNexis and RGA Reinsurance Study began to be presented to insurers which introduced the concept of data analytics. This study showed that for many life insurance applicants, insurers could replace the longstanding practice of obtaining medical records and ordering medical exams with the results of a complex algorithm. If this concept worked, it would reduce the cost of life insurance and change the process of buying life insurance for millions of people. After three years of scrutiny, LexisNexis Risk Solutions began to put the concept to work for some insurers. Their data analytics product is called Risk Classifier (Hersch, 2016)
How does it compare?
In the traditional method of issuing life insurance, the person that reviews applications and makes the final determinations on the insurable status of applicants is called the life insurance underwriter. This new method of processing life insurance applications takes life insurance underwriters out of the process completely. With LexisNexis, the applicants’ data is sent to LexisNexis, and they send back a score to the life insurance company (Hersch, 2016). The score either determines if the customer’s application will be approved or marked for traditional life insurance underwriting.
Who is offering it?
Many life insurance companies do not want their business operations information to be public information. So, it is not possible to know which companies have signed on to use the LexisNexis’ Risk Classifier. Except for The Savings Bank Life Insurance Company of Massachusetts (SBLI) has made it public that they are using LexisNexis’ services (Hersch, 2016). SBLI is an A+ rated life insurance company by A.M. Best, and they have been very competitive in the term life insurance market in recent years.
The life insurance industry historically has been slow to change, and those that are beginning to use the new data analytics process for life insurance underwriting are keeping a watchful eye on the results. They are also limiting their risk by limiting the size of life insurance policy that they are willing to accept through the data analytics process. SBLI and Banner Life Insurance Company are limiting their policies to $500,000. Lincoln National and Principal are accepting accelerated underwriting life insurance policies up to $1,000,000.
In the past, if you wanted to buy life insurance you had to go through a para-med exam, have a blood test, and urinalysis completed, then have your medical records sent to the life insurance company. You then had to wait for four to six weeks to see if the rate you were shown is acceptable, going to change or be declined. I have had life insurance applications take as long as three months to complete. It does not take a lot of intuition to know that people do not like all the paperwork and the wait. However, up until now, the technology did not exist to do the job better.
Does it cost more?
It is important to differentiate an old concept of No-Exam Life Insurance. The data analytics algorithm is not the same strategy used for Final Expense Life Insurance. For years, final expense life insurance has been available to older adults, usually beyond the age of 50. These are policies that have a $25,000 death benefit or less. They are also whole life insurance policies. The idea of the policies is that customers will pay more for the life insurance if it is guaranteed issue or a limited amount of medical information is required. For some older adults looking for a final expense life insurance policy, that is a good way for them to buy life insurance. However, the No-Exam Life Insurance introduced in this article today is very competitive against any term life insurance available.
What if data analytics does not work?
Currently, the number of life insurance companies that are using data analytics is low. Insurers are cautious because if the concept does not work, it could prove financially devastating for the life insurance company. So, insurers are slowly introducing products. The primary policies being offered now are term life insurance products. Customers should not worry about the overall success of data analytics because their contracts are guaranteed. If the data analytics concept fails, insurers will go back to their core business model. Existing life insurance policies issued will be honored. However, insurance companies will stop offering policies using data analytics. With that in mind, an old saying comes to mind, “make hay while the sun shines.” In other words, if you need life insurance and you fit the parameters for No-Exam Life Insurance, it is a great product to buy. It is low priced, issued within days and will protect your loved ones for years.
To apply for No-Exam Life Insurance visit my No-Exam Life Insurance page.
By Van Richards
References
Hersch, W. (2016, November 14). LexisNexis shifts life
insurance underwriting into high gear. LifeHealth Pro.
Wart, B. W., Schiller, J. S., & Goodman, R. A. (2014). Multiple
chronic conditions among US adults: A 2012 update (doi 10.5888/pcd11.130389).