I just read the following article from Amy Danise on Forbes entitled “Door May Be Closing On Life Insurance Buyers Amid COVID-19” and it really disturbed me. Not because the news is bad or the intent is wrong, but rather, because it is factually incorrect. Specifically the paragraph seen below where Mr. Bland from LifeQuotes (an online life insurance agency) is quoted.
Skirting the Life Insurance Medical Exam
Many life insurers use a life insurance medical exam as one tool to gather information about applicants. The exam is often done by having a paramedical professional come to your house to collect information on your height, weight and blood pressure, and take blood and urine samples.
The prospect of that is unacceptable to many life insurance buyers now.
“We are hearing directly from customers who are balking at meeting with a paramed examiner,” says Bob Bland, CEO of LifeQuotes, an online life insurance agency. As a solution, LifeQuote’s agents will focus on quotes for no-exam policies. In general these are more expensive than policies that require an exam.
“We’re kinda being forced into recommending a shorter term no-exam [policy], such as 10 years, with the thought of getting a lower cost exam-required plan at a later date,” says Bland.
There are also options for fast life insurance, including instant life insurance, with a range of pricing. Younger and healthier applicants tend to qualify for these policies. But taking a life insurance medical exam has typically been the pathway to the best rates.
To be clear, the life insurance industry is making great strides to find ways to make prudent and fair underwriting decisions without medical exams in this world of “social distancing”. Mr. Bland is absolutely correct that prospects do not want to buy insurance today if it involves letting someone, they don’t know, come in to their house to do an exam. He is also absolutely correct that the way to go is “no-exam” policies.
Where he is absolutely wrong is that “no-exam polices” are more expensive than policies that require an exam. Taking a life insurance medical exam is NOT the pathway to the best rates, in fact, there are many carriers that can (and do) offer Preferred Best rates without an exam, measurements or labs as if it had been fully underwritten. We do it every day.
Algorithmic Underwriting, also known as Accelerated Underwriting, can be as effective as full underwriting in obtaining “best rates”.
Recent conversations with a few of the Chief Underwriters from some of the largest insurance companies in America, confirms that. The point is that new technology is affording insurance companies enough information to make long term, prudent underwriting decisions without current lab work and measurements – without making the cost of insurance any more expensive for the consumer. In fact, the long term savings that the carriers are experiencing by NOT paying for paramedic exams, labs and medical records is providing the cost offsets to continue to provide life insurance at the low price points that consumers enjoy today.
Recommending a “shorter term no-exam [policy], such as 10 years, with the thought of getting a lower cost exam required plan at a later date” is the wrong strategy and not in the best interest of the client