Taking out term life insurance for your family used to be an arduous, inconvenient ordeal. It required you to submit to a medical exam, give a blood sample and then wait at least 30 days and up to three months for approval. That’s so yesterday!
Now, the power of big data and the sophisticated technology of predictive analytics are changing everything. In an age when many of us are accustomed to ordering groceries online for same-day arrival, you can also apply for instant term life insurance online. Also, your policy may be approved in about ten minutes.
Accelerated underwriting is taking the insurance industry by storm. Instant term life insurance means an easy online application, no physical exam, policy portability, quick approval and no waiting period. Best of all, it’s not just for supplemental coverage. In some cases, physicians can get a multi-million dollar term policy in minutes—just by applying online.
If you’re under the age of 60, don’t suffer from any chronic medical conditions and don’t have risky habits or hobbies, instant term life insurance means you can get term life insurance without the hassle and wait.
Here’s how it works.
No Medical Exam Application Process
While the process is fast and anyone can apply, you need to understand that acceptance isn’t guaranteed. Also, decisions are based on the same actuarial data used in traditional term life. In other words, this is standard term life. It’s just faster and more convenient due to the online application process, extensive database access and predictive analytics used.
That means that you still go through an underwriting process to assess your insurability based on age, lifestyle, health and medical history. It’s just done using Big Data technology.
If you are under 60 (some companies require you to be under 55 or 50), generally enjoy good health and don’t have any risky hobbies (such as hang gliding or mountain climbing), the odds are that you will qualify.
And you shouldn’t be paying higher rates. Premium prices are in line with traditional term life policies. While policies do vary, and you will want to shop around, here is some of the terminology used with instant term life insurance that you need to know:
- Accelerated underwriting: Refers to a fast application process that bases its approval on extensive data resources and sophisticated algorithms. However, in some cases, when the system cannot reach an approval conclusion, your underwriter will request additional information.
- Simplified issue: Because this process collects fewer data sources than accelerated underwriting, the premiums are typically not as competitive.
- Automated underwriting: Indicates an online/machine-based approval process that does not require human intervention.
Big Data Access
As we all know, so much of our private data is online today and it is stored in a database somewhere. That’s why when you apply for instant term life, you will need to give the insurance company permission to run online background/and or credit checks.
Accelerated underwriting relies on several data sources, including:
- The Motor Vehicle Records (MVR) databases have real-time records on any DUIs, tickets and license suspensions you may have received.
- The Medical Information Bureau (MIB Group) contains any medical information you’ve given to insurance companies in the past.
- Prescription databases, such as Milliman IntelliScript, which contain information on any prescription medications you are taking.
AI-based Predictive Actuarial Algorithms
Data analysis used to be a matter for human underwriters who calculated your risk and longevity based on actuarial tables. Today, that job is automated thanks to artificial intelligence and predictive algorithms. These are built based on actuarial data, real-life case studies and machine learning.
For example, the algorithm can factor in a pre-existing condition even if you have enjoyed good health for several years. Much like a human underwriter, it can decide in your favor or request a follow-up exam.
While the company may set upper limits on age, the system can calculate the maximum length of your term. It’s usually set to offer a term of coverage not to exceed age 75.
Instant Term Life Benefits
One of the most attractive benefits of instant term life is the speed and convenience with which healthy, young, and middle-aged people can qualify for term life. In most cases, you don’t even need to speak with an agent. Because coverage can range between hundreds of thousands of dollars and up to about $3 million (varies by the insurance company), you can rely on instant term life as either a supplemental or primary plan.
Portability is another benefit of instant term life. If you work for a hospital or medical group, for example, you have the option to retain your benefits with the same format and coverage amount when switching employers.
Some policies, including the instant term life available through AAFP, do not have a suicide exclusion clause. While this is not something anyone expects, it’s nice to know that your family is protected even under the worst situations.
Thus, physicians interested in term life insurance can now enjoy fast, hassle-free access to competitively priced term life—either as a supplemental or primary policy.