Is the life insurance medical exam on its way to extinction? Will giving blood as a requirement for coverage eventually disappear like all those Blockbuster stores? Will bringing back a bathroom sample someday be a thing of the past? For the answers to these and other awkward questions, read on.
Got life insurance? If not, why not? Is it because you’ve heard all those horror stories about the hoops you have to go through to get coverage? And all those pesky questions about your family’s medical history. Or that nail-biting background check. Or all those fun-filled medical tests that really ratchet up the “Ewwww” factor. Am I getting warm?
Well, all these slightly-disagreeable personal intrusions might someday be a thing of the past. And that day may come sooner than you think. But first, let’s start at the beginning. The beginning of your life insurance application process.
What happens during the medical exam?
Typically, after you and your agent have determined what type of life insurance policy best fits your needs, you then begin what’s called the “underwriting” process. The underwriter phase allows the insurer to verify the personal information you provided. The next step is the medical exam. (Note: There are No Medical Exam policies out there, but they tend to be more expensive…but not always. Ask us!)
A standard insurance medical exam consists of a mini-physical, which includes taking your height and weight, and your blood pressure. Typically, a urine and blood sample are requested as well.
Traditionally, urine and blood tests have been a time-honored way to get vital medical data efficiently, so underwriters can more accurately evaluate the carrier’s risk of insuring you. A blood test can quickly evaluate your A1C levels, and determine if you have high blood sugar or if you’re at risk for diabetes. Another blood test can determine your risk for heart attacks and stroke. A urine test can detect the presence of illegal drugs and nicotine in your system, and can recognize the early signs of kidney, liver and heart disease.
How has this process changed?
As we all know, in life, nothing stays the same for long. Especially in the world of technology. In fact, some in the insurance industry predict that the actual medical exam might become completely unnecessary in the foreseeable future.
According to a recently article in USA Today, there are now alternative methods of gathering the type of personal and medical information that insurance companies need to assist them in determining an individual’s policy premium. One of these processes is called “Accelerated Underwriting.”
What makes Accelerated Underwriting different?
Thanks to the Internet, much of your personal information is already available online (whether that’s a good thing or a bad thing is a subject for another blog), and thus accessible to underwriters to help them better determine the insurer’s level of risk.
With this “Accelerated” option, underwriters can access your prior medical records and other pertinent data to create a risk assessment profile that could make a medical exam practically unnecessary in the future.
Not all insurance companies offer this “Accelerated” option. But for the carriers that do, you can get affordable term life insurance (providing you’re young and healthy) by going online and answering a few questions…without a medical exam.
How does this “Accelerated” option works?
First, you answer a few simple question about your health and family history of health issues. Second, you then give the insurer permission to access some of your personal data, such as your driving record, prescription drug history, and any prior life and health insurance activity. Finally, all this data is fed into various algorithms that will evaluate and determine A) if you qualify for the policy you’re seeking and B) if approved, what will be the price you’ll pay for the policy.
“In the next 10 years, we are going to see that requirement (the medical exam) go away…for most people,” says Elliot Wallace, vice president and general manager of life insurance for LexisNexis Risk Solutions. Whether Mr. Wallace is right, well, that remains to be seen.
Will the medical exam ever go away altogether?
Probably not entirely. If you’re older and in less-than-perfect health (such as a history of high blood pressure or diabetes), insurers, in all likelihood, will request a medical exam.
But predictive data analysis (such as the algorithms used for Accelerated Underwriting) is probably here to stay. Speeding up the application and approval process by these new analytical methods has the potential to help get Americans insured more quickly, and with less hassles.
The Life Insurance and Market Research Association (LIMRA) recently stated, 48 percent of U.S. households don’t have life insurance to protect their families. “As an industry, we need to redouble our efforts to educate consumers about life insurance in a simple-forward way,” says Robert Kerzner, president and CEO of LIMRA.
To decrease the uninsured in this country, the insurance industry will continue its efforts to streamline the application and approval process. And to that end, Accelerated Underwriting is definitely the new implement in the toolbox.